Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

Oral Answers to Questions — WALES

Unemployment

Lady Olga Maitland: To ask the Secretary of State for Wales if he will make a statement on current trends in the level of unemployment in Wales. [18861]

Mr. John Marshall: To ask the Secretary of State for Wales if he will make a statement about unemployment in Wales. [18836]

The Secretary of State for Wales (Mr. William Hague): Unemployment is falling fast in Wales. It has fallen by 9,200 in the past three months.

Lady Olga Maitland: I thank my right hon. Friend for his reply. I extend my hearty congratulations on his recent engagement. I know that we all wish him the very best for the future. His announcement coincides with the excellent unemployment figures. Is he aware that, at 7 per cent., unemployment in Wales is far lower than unemployment in the European countries, such as France, Germany and Italy, and in Spain, where it is 22 per cent? That is because those countries have been saddled with the social chapter and the minimum wage. Does my right hon. Friend agree that the people of Wales would be cruelly cheated if this country should ever support a Labour Government, who would cost them their jobs and their livelihoods?

Mr. Hague: I am grateful to my hon. Friend: she is correct about unemployment in Wales. The Government have brought new jobs to Wales in record numbers in recent years. Week after week, there have been new announcements of additional employment. This weekend, Optical Fibres—an extremely high-technology company based in north Wales—announced that it has a thriving order book and that it expects its output to quadruple by 2001, and announced 200 new jobs in north Wales. Hon. Members on both sides of the House will no doubt welcome that announcement, but only Conservative Members are prepared to pursue the policies that will keep such announcements coming.

Mr. John Marshall: Will my right hon. Friend join me, as a regular visitor to Welsh questions, in welcoming the hon. Member for Stratford-on-Avon (Mr. Howarth) to his first Welsh Question Time? Does my right

hon. Friend agree that the improvement in the Welsh economy is due to the fact that we have modern industrial relations and low corporate taxes and have not signed the social chapter? Does he also agree that a party that is in hock to the trade unions would destroy our industrial relations, and that a party whose Chief Whip says that it wants to refine the tax system would soon deal with corporate taxes too?

Mr. Hague: My hon. Friend is right. The Opposition want to pursue, in Wales and in the rest of the United Kingdom, policies that have thrown millions of people out of work in continental Europe. Unemployment in Wales has fallen by more than 9,000 in the past three months, while unemployment in Germany and France has reached post-war highs. The Opposition propose that other countries should decide our social and labour rules and regulations.
It would be churlish of me not to welcome the hon. Member for Stratford-on-Avon (Mr. Howarth) to Welsh questions—although heaven knows what the people of Newport, East will think that they are being asked to vote for in the election, or which party the hon. Gentleman will end up in by the end of the next Parliament. Nevertheless, I hope that he will join me in welcoming a 19 per cent. fall in unemployment last year in the constituency that he seeks to represent.

Mr. Alan Howarth: I assure the right hon. Gentleman that the people of Newport will vote for a Labour Government because they know that a Labour Government will give steady and reliable support to higher and further education. Does he accept that it is crucial to the employment prospects of the people of Newport and to the success of inward investment in Wales that we should have full-hearted support for education? Does he share my grave concern at the closure of the engineering course at the university of Wales institute in Newport?

Mr. Hague: The hon. Gentleman is right: education is extremely important to future job creation in Wales. I hope that he will join me in welcoming a newspaper headline of two weeks ago which said that south-east Wales will be the best place in the United Kingdom to get a job for several years to come—perhaps it sent him off in that direction. It is important to invest in education and training. That is why much of the assistance that we are giving to the LG project, which will benefit the Newport area, is in the form of help with training. We shall continue such support.

Mr. Ron Davies: I also extend my welcome to my hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) on his first attendance at Question Time on Welsh affairs, and offer him my congratulations on winning the nomination for his new constituency of Newport, East. I am sure that it will be the last for a long time while sitting on the Opposition Benches.
Any fall in unemployment is obviously to be welcomed, but why does not the Secretary of State present the more rounded picture of the Welsh economy? Will he confirm that we now have 200,000 fewer people in Wales in employment than we did when the present Prime Minister took office? As the low pay unit showed last Friday, in addition to Wales having the highest proportion


of full-timers earning less than that represented by the European decency threshold, the pay gap between Wales and the rest of the United Kingdom is widening.
Now that the election is upon us, the choice for the people is clear. The Labour party offers hope for the future with plans for the young and long-term unemployed, improvements to training and education, the establishment of the university for industry, investment incentives and infrastructure investment, along with welfare-to-work programmes, partnership with the private sector and a revitalised Welsh Development Agency.
How proud is the Secretary of State that, after 18 years in office, all that his Government have to offer is a divided party, a weak leader and excuses for past failures?

Mr. Hague: The hon. Gentleman says that any fall in unemployment is obviously welcome. That has become a routine comment for Opposition Members because a fall in unemployment has become routine. It would not be a routine thing if we were to follow the Labour party's policies. Adoption of the social chapter and a minimum wage would price tens of thousands out of their jobs along with hundreds of thousands throughout the rest of the United Kingdom.
The hon. Member for Caerphilly (Mr. Davies) asked whether I am proud of what we have done in Wales. I am proud of what we have done in building a stronger economy, investing in infrastructure and delivering the best prospects in the lifetime of my generation in Wales and in the rest of the United Kingdom. The Welsh economy needs the hon. Gentleman presiding over it as it needs a hole in the head.

Sir Wyn Roberts: I, too, extend my felicitations to my right hon. Friend on his engagement.
Is not one of the reasons for the favourable disparity between the 7 per cent. unemployment rate in Wales and the 12.5 per cent. in Germany, with 12.4 per cent. in France, the fact that we have cut public expenditure as a proportion of gross domestic product? Is it not becoming clear that, were the Labour Opposition to return to government, that policy would be abandoned, causing a devastating rise in unemployment in the longer term?

Mr. Hague: I thank my right hon. Friend for his personal remarks. As I do not have any briefing on those, I do not think that it falls within my ministerial responsibilities more fully to respond. My right hon. Friend has asked what must be the last question that he will be asking at Welsh Question Time during a long career in the House. I am sure that the entire House would wish to pay tribute to him and to the work that he has done for Wales and his constituents over so many years.
My right hon. Friend is right about expenditure, and he is right about the Labour party's policies. Labour says that it would not spend any more money in Wales over the next two years than that which is set out in our plans. It says also that it wants to give more money to local authorities and to the Welsh Development Agency. At the same time, it will have to finance a Welsh Assembly. The people know that that does not add up. The Labour party will be rumbled.

Cardiff Bay Development Corporation

Mr. Touhig: To ask the Secretary of State for Wales when he last met the board of Cardiff Bay development corporation. [18828]

The Parliamentary Under-Secretary of State for Wales (Mr. Gwilym Jones): My right hon. Friend and I have regular meetings with the chairman and my right hon. Friend last met the board in May 1996.

Mr. Touhig: Is the Minister aware of the remarks made by his right hon. Friend the Member for Wokingham (Mr. Redwood), who recently described quangos as being logo manufacturers and gatherers of knighthoods? I cannot think in what context that comment would apply in Cardiff bay. Does the Minister agree with the Secretary of State that decisions are best taken by people elected to office and not by people appointed to quangos who meet in secret behind closed doors?

Mr. Jones: From his time in the Welsh Office and since, I know that my right hon. Friend the Member for Wokingham (Mr. Redwood) and I share similar approaches towards quangos. I find the hon. Gentleman's remarks somewhat odd as he is a Johnny-come-lately into Welsh politics who has been saddled with trying to breathe life into the corpse of a Welsh Assembly. He is the proponent of the arch quango.

Sir Irvine Patnick: Does my hon. Friend agree that all development corporations have brought investment and work into their areas? Is not the Cardiff Bay development corporation an example of the good things that the Conservatives have done, despite opposition from the Labour party?

Mr. Jones: My hon. Friend is right; he points to the reality of the situation. We have lame acceptances from Labour Members that any fall in unemployment is welcome. We get equally lame acceptances of any new announcement. The Cardiff bay redevelopment is confidently expected to generate 29,000 jobs in the capital city of Wales and throughout south Wales. Who were the stoutest opponents of the scheme? They were Welsh Members sitting on the Labour Front Bench.

Manufacturing Skills

Mr. Fabricant: To ask the Secretary of State for Wales what action has recently been taken to raise the level of manufacturing skills in Wales. [18830]

The Parliamentary Under-Secretary of State for Wales (Mr. Jonathan Evans): A great deal of action is being taken. That includes provision for a further 4,800 young people to start modern apprenticeships in 1997–98; increased funding for adult technician training; and initiatives to meet the need for skills in the electronics and semi-conductor sectors.

Mr. Fabricant: We take for granted falls in unemployment and we are beginning to take for granted the fact that Wales is becoming the silicon valley of Europe. Will my hon. Friend pay tribute to liquid manufacturers, such as Ty Nant, the water manufacturers


in Lampeter? Will he also pay tribute to Swy y Mor, the Welsh whisky manufacturer, whose product is available throughout the known world? What would be the effect on those manufacturers of the imposition of European employment law?

Mr. Evans: I happily respond to my hon. Friend's invitation in relation to the Welsh whisky company because it is based in my constituency. I have noted my hon. Friend's welcome for the great success of Ty Nant water. A number of water companies within the Principality have managed to develop a high international profile. My hon. Friend is right to say that that does not just happen, as Labour Members believe. It is the product of investment in the skills of the people who work in those businesses. The difference between us and Labour Members is that we understand that, whereas they do not.

Mr. Roy Hughes: Is not the true answer to the question that little has been done to raise manufacturing skills in Wales? Is that not the reason why the average wage in Wales is the lowest in the United Kingdom, with some workers getting as little as £1.61 an hour? Is not the low pay unit report a fitting epitaph for this Government? On 1 May, the people of Wales and of Great Britain as a whole will say that enough is enough.

Mr. Evans: I preface my remarks by saying that I anticipate that that question will be one of the last contributions made by the hon. Gentleman. Whatever political differences there have been between us, he well knows that I very much respect him. I find it rather strange, however, to see him sitting with the hon. Member for Stratford-on-Avon (Mr. Howarth) and the hon. Member for Newport, West (Mr. Flynn). What an incongruous threesome they make. The hon. Member for Newport, East (Mr. Hughes) used to understand that introducing a minimum wage was a way in which to destroy jobs. It is rather sad that he is singing a different tune now.

Mr. Ian Bruce: Would my hon. Friend care to speculate on the effect on jobs in Wales, particularly in the telecommunications industry, were BT to lose £2 billion or £3 billion in a windfall tax and the money that supports those jobs were transferred to make-work schemes and training schemes that have no jobs at the end of them?

Mr. Evans: My hon. Friend is absolutely right. That is why the Labour party says so little about the implications of the windfall tax. Many people who work for the privatised utilities in Wales have good cause to take on board the points raised by my hon. Friend and, furthermore, the effect on jobs of the introduction of the social chapter—a matter that has been raised not only by my hon. Friends. I had the opportunity of visiting one of our biggest mid-Wales businesses and the first point raised with me expressed concern about Labour's policy in that respect.

Mr. Wigley: If this is indeed the hon. Gentleman's last Welsh Question Time, may we wish him well in his future incarnation? May I press him on the point that the most relevant investment in manufacturing industry is often in higher and further education, which provide the necessary

skills. In that context, is the Minister happy, after receiving representations from the university of Wales and other colleges concerning the reduction in the funding available for education and research? Is he aware that we shall lose considerable input into the Welsh economy unless the shortfall is found? The Secretary of State says that the money is not available for higher education because it has gone into LG, but surely we need to find money for both if we are to invest in the future.

Mr. Evans: There has been a significant expansion over the years in investment in higher and further education in Wales, as the hon. Gentleman is aware. His point relates to this year's provision in respect of further education, which has increased to some £162.5 million. Against the background of some of the representations from the sector, last year there was clear recognition that the settlement for Wales was higher than that for England.

Mr. Win Griffiths: The Minister gives a rather belated example of conversion to sensible policies on training when it was a Conservative Government who slaughtered apprenticeship schemes in the 1980s. While we welcome his new conversion to modern apprenticeships and the additional money provided for technicians this year, is it not true that there have been cuts in the budgets of the further and higher education funding councils and in the overall employment and training budget? Manufacturers throughout south Wales remain concerned about the shortage of training skills and the Government's own target for training and skills is still woefully behind what is really needed. Will it not be a real blessing when, in May this year, we have a Government who will truly concentrate on improving skills and education in Wales?

Mr. Evans: All that I would say to the hon. Gentleman is that the Council of Welsh Training and Enterprise Councils recently published an action plan for manufacturing. The hon. Gentleman tells us that he has read it, so perhaps he will have read the response from a range of agencies—the Welsh Development Agency, the Development Board for Rural Wales, the Further Education Funding Council for Wales and the Confederation of British Industry—and from their paymasters, the Trades Union Congress. They all welcomed the approach in that document and I urge Opposition Members to do so as well.

Quangos

Mr. Ieuan Wyn Jones: To ask the Secretary of State for Wales what representations he has received about appointment to quangos in Wales during 1996. [18831]

Mr. Hague: My Department has received several representations.

Mr. Jones: Does the Secretary of State acknowledge that one of the most miserable and disreputable aspects of the Conservative Government in the past 18 years has been the way in which they have appointed their friends to run quangos in Wales? What could be more damaging to the cause of democracy than for Members of Parliament rejected by the electorate to be appointed to run the health service and represent the interests of consumers in Wales? With one or two notable exceptions,


does he not realise that all he and his friends have done is further the cause of the Conservative party in Wales? We deserve a far better system of government and we shall vote for it on 1 May.

Mr. Hague: After the question by the hon. Member for Caerphilly (Mr. Davies) earlier, I thought that it was impossible to hear more rubbish in one question time. However, we have now heard more from the hon. Member for Ynys Môn (Mr. Jones) who says that we have filled boards with political friends of the Conservative party. Lord Elis-Thomas does a good job for the Welsh Language Board and he was appointed by the Conservative Government. I have recently appointed to the WDA board Councillor Noel Crowley of Neath and Port Talbot, who is a leading member of the Labour party in Wales. There is also George Wright, who is a leading representative of the trade unions in Wales. Those people sit on those bodies because we select people for them on merit—and that is how it should be.

Mr. Hanson: Will the Secretary of State confirm that the recent group of people that he appointed to monitor appointments to quangos were themselves appointed without any advertisements being placed—on his say-so only? Is it satisfactory to have a quango monitoring appointments to quangos? Would it not be far better to have an elected assembly monitoring the performance of quangos?

Mr. Hague: What we have under the new arrangements is an independent element in the selection of people for public office. If the hon. Gentleman or anybody else suggests people for those lists, they would of course be considered. The idea that better appointments would be made because there was a room full of people in an assembly arguing about it, and claiming a fat expense account for doing so, is absolutely ludicrous.

Mr. Bernard Jenkin: I invite my right hon. Friend to reflect on the irony that many Opposition Members who campaigned vigorously against quangos want to hand their country over to the ultimate quango—the European Commission in Brussels.

Mr. Hague: My hon. Friend raises an important issue. It is the Labour party's policy to sign away—no doubt it would do it at the Amsterdam summit if it had the chance—and get rid of the British veto on social policy, regional policy, industrial policy and environmental policy. That is not a policy that will win the support of the British people.

Job Insecurity

Mr. Hain: To ask the Secretary of State for Wales what recent assessment he has made of job insecurity in Wales. [18832]

Mr. Jonathan Evans: In spring 1996, according to the labour force survey, 8.3 per cent. of Welsh employees were in temporary employment.

Mr. Hain: Has the Minister had any discussions with Lucas Industries Ltd. over the closure of its Neath factory and the transfer of 170 jobs to Poland? Why does he keep

denying that job insecurity in Wales is rife, when the number of temporary workers has increased since the last election by more than a quarter, and in his own backyard in the Welsh Office, it has increased by a half? He will soon understand a great deal more about job insecurity when the voters of Wales sack all the Conservative Members on 1 May.

Mr. Evans: The hon. Gentleman would do better not to prejudge the outcome of the election. As he is interested in international comparisons, let me point out that the number of people who are engaged in temporary employment is higher in France, Germany and Spain than in Wales. Furthermore, if he is concerned about the exportation of jobs, it is rather odd that he should be spending his time arguing in favour of a national minimum wage and the social chapter, which will destroy jobs in Wales.

Dr. Spink: Will my hon. Friend confirm that job insecurity is a function of unemployment—the higher the unemployment, the more insecure people feel about their jobs? The policies that lead to higher unemployment are those that the socialists would introduce, such as the minimum wage and the social chapter; policies that would see the expansion of the Welsh Assembly, which would deter inward investment to Wales, destroy Welsh jobs and increase job insecurity.

Mr. Evans: My hon. Friend is absolutely right. Every week, we hear of new inward investment projects in Wales and of jobs going to the Principality. The United Kingdom stands at the top of the tree of performance in Europe in attracting new inward investment, and Wales is taking more than its proportional share of that. Wales has been pursuing that success under a Conservative Government—success that would come to an end if there were to be a change on 1 May.

Mr. Rowlands: The Secretary of State said a few minutes ago that he was proud of the employment record under his Government. Is he proud of the fact that 40 per cent. of men aged between 50 and 64 are economically inactive? That is the highest percentage of any region or nation in the United Kingdom. Is he proud of the fact that, despite many representations, he and his predecessor have done nothing about one of the most serious social and economic problems that has faced our communities?

Mr. Evans: The Secretary of State and I are proud of all of the efforts that are being made to attract new job opportunities to Wales and, especially, to the hon. Gentleman's constituency. Significant investment has been made in the road network and in new job opportunities in his constituency. His constituents would not have had those opportunities under a Labour Government.

Mr. Garnier: Would not one of the best ways to increase job insecurity in Wales be to introduce some of the working practices of mainland Europe? For example, is my hon. Friend aware that it is illegal to work more than 80 hours a year overtime in Spain; it is illegal to work any overtime at all in Luxembourg without informing the authorities; and it is illegal to work overtime in Belgium without the express permission of the authorities? Are not those the policies of the European social model that is warmly advocated by the Labour party?

Mr. Evans: That is why industrialists and those who are running businesses in Wales have expressed their concerns to us about the proposal to sign the social chapter. The Labour party advocates an idea that would destroy jobs in Wales. We must not, and we will not, go down that route.

Mr. Morgan: Does the Secretary of State agree that he could reduce job insecurity in Wales by approving the Eurofreight terminal at Wentlloog between Cardiff and Newport? Unconscionable delays have been caused by his inability to make a decision, and thousands of jobs have been destroyed. Before the Secretary of State leaves Wales in his private plane to join the Tory leadership contest, will he undertake today to announce the decision on the Eurofreight terminal before the end of this Parliament? His uncertainty on the issue makes Prince Hamlet of Denmark look like General Stormin' Norman Schwarzkopf.

Mr. Evans: It is my understanding that the Secretary of State is awaiting a report from the Welsh Development Agency on that matter. [Interruption.] I recall that the hon. Member for Cardiff, West (Mr. Morgan), who is making such a noise from a sedentary position, said some months ago that it was the most important decision to be made in south Wales. He made that statement two weeks before the Secretary of State announced the biggest inward investment project in Europe by LG. That shows how in touch the hon. Gentleman is.

District General Hospitals (Dyfed Powys)

Mr. Dafis: To ask the Secretary of State for Wales if he will make a statement about funding for district general hospitals within the Dyfed Powys health authority area. [18833]

Mr. Gwilym Jones: For 1997–98, we have announced a cash increase of £6 million for Dyfed Powys health authority.

Mr. Dafis: The Secretary of State has recognised already the need to reconsider funding for health care in Dyfed Powys to take account of rurality. He must know also that some trusts in the area are heading for significant deficits this time next year, because of the present funding arrangements. Does he accept that that will lead to serious problems for some district general hospitals, especially Bronglais hospital, which serves a wide area? To prevent that immediate crisis from developing, additional funding is urgent and necessary. Will the Secretary of State commit himself or his successor to provide that additional funding?

Mr. Jones: I have already announced additional funding for Dyfed Powys health authority of £6 million. I have the strangest sense of déjà vu, because the first time that the hon. Gentleman raised the matter in the Chamber he started the scaremongering about Bronglais general hospital. Now that the scare over the community hospitals, which was so wickedly whipped up by certain people—not those on the Conservative Benches—has been resolved, scares are being raised about the general hospitals. That is a contemptible way to approach health care in west Wales.

Mr. Ainger: Given his answer to the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis), has the

Minister read the report produced by Dyfed Powys health authority, entitled "Effective Care and Healthy People", in which it offers three options to cope with the financial crisis? The first is to close all community hospitals in the area; the second is to close two out of four of the district general hospitals; and the third is to close some of the community hospitals and cut some of the district general hospitals. Opposition Members are not scaremongering: the health authorities are telling the truth, but the Welsh Office refuses to listen.

Mr. Jones: The new Dyfed Powys health authority, which has inherited an overspending tendency, is conducting a review. My right hon. Friend the Secretary of State stated his regard for community hospitals during the Welsh affairs debate on 27 February, and added that he wanted them to continue their role. When he considers any proposals, he will have strong regard for local views about local health needs, and will not adopt the scaremongering approach advocated by the Opposition.

Mr. Alex Carlile: Will the Minister give a clear undertaking that there is no risk of closing any of the valuable community hospitals in Powys?

Mr. Jones: There is no need to say any more because my right hon. Friend the Secretary of State made the position clear on 27 February. I say simply to the hon. and learned Gentleman—before he flits off to pursue his more prosperous legal practices—that neither my right hon. Friend nor I is in the business of closing necessary hospitals anywhere in Wales. We are certainly not in the business of cutting the NHS. We are committed to expanding it—a commitment that the Labour party markedly refuses to match.

Mr. Ron Davies: Is it not disgraceful that the Under-Secretary seeks to avoid responsibility for this serious matter by claiming that the health authority has "inherited" the relevant responsibilities? I remind him that he created the health authorities and appointed the people to run them. They are directly his creation. Is it not clear that something is fundamentally wrong with the funding of Dyfed Powys health authority? I make it clear that the Labour party supports the campaign now being waged to conduct a fundamental review of the funding formula. Is not the Under-Secretary's opposition to the closure of community hospitals by the health authority both hypocritical and dishonest, as he is directly and personally responsible for that funding crisis? In addition, all his words this afternoon have not changed the fact that that crisis remains. Is that not typical of the Government, who practise deception and evasion and advocate the fraudulent making of policies today which they have no intention of honouring tomorrow? Is it any wonder that they have lost the trust of the people?

Mr. Jones: The hon. Gentleman clearly is not aware of the circumstances. I have moved to assist Dyfed Powys health authority by extending one loan and providing another, and I am ready to assist it with transitional cash flow. It is the hon. Gentleman who is clearly ducking, as he will not make a promise—perhaps because he knows that he cannot honour it—to match our commitment to continue the real increases in spending for the health service each and every year in the next Parliament.

Relocation (Minimum Wage)

Mr. Flynn: To ask the Secretary of State for Wales if he will establish how many jobs have been relocated from Wales to countries that have the minimum wage in each of the past five years. [18834]

Mr. Hague: There are no data readily available to perform such an analysis.

Mr. Flynn: Is not Newport doubly fortunate, as it can look forward to the LG semi-conductor jobs and to being represented in the future, as in the past, by splendid Members of Parliament? Is it not extraordinary that the Government can count the number of incoming jobs and announce the figures again and again, but cannot say how many jobs have left this country to relocate in countries with both the minimum wage and the social chapter? Is it not extraordinary that when LG is up and running, it will be competing for semi-conductor jobs that used to be based in Newport but are now located in France and Germany? Why does a country such as Britain, which has won 74 Nobel prizes for science, have to buy scientific jobs from a country that has never won such a prize?

Mr. Hague: We all commend the hon. Gentleman on his becoming modesty in describing himself as a splendid Member of Parliament. I certainly hope that Newport will be represented by two splendid Members in the coming Parliament, but not necessarily the current ones. The hon. Gentleman should not presume about the outcome of elections.
If Labour Members are so in favour of the minimum wage, why cannot they say at what level they would set it? It is because it would be either so low as to be utterly irrelevant or so high that it would price people out of work. They will have to own up to that in the coming weeks.

Mr. Llew Smith: Is the Secretary of State aware that in Blaenau Gwent we have some of the lowest wages in the United Kingdom? Would he be willing to work for £2 or £3 an hour? What advice would he give to families who have to bring up children on that kind of money?

Mr. Hague: The hon. Gentleman must recognise that wages cannot be raised by Government diktat. Wages and living standards are raised by having an enterprise economy, by the promotion of employment and by businesses doing well and having to compete to employ people. That is happening increasingly in many parts of Wales. We have already made south-east Wales the best place in Britain to get a job, and I want that to be the case in the whole of Wales. That will deliver rising living standards all round.

Sir Wyn Roberts: Is it not a fact that the company referred to by the hon. Member for Newport, West (Mr. Flynn) is a French nationalised company, Thomson SLG? Is it therefore surprising that it should behave in such an extraordinary way?

Mr. Hague: My right hon. Friend has a point—apart from having asked another question after I had paid tribute to him on his previous question. He could also have mentioned the fact that unemployment in France

stands at 12.5 per cent. and has risen in the past year, whereas unemployment in Wales is about 8 per cent.—depending on which definition one uses—and has fallen dramatically in the past year.

Inward Investment

Mr. Richards: To ask the Secretary of State for Wales what action has been taken to encourage more inward investment in Wales outside the eastern M4 and A55 corridors. [18835]

Mr. Hague: I have recently set the Welsh Development Agency new and more demanding targets to encourage more inward investment outside the eastern M4 and A55 corridors. I have also asked it to give more assistance to companies locating in those areas than to equivalent projects elsewhere.

Mr. Richards: May I congratulate my right hon. Friend on his announcement of new targets for investment outside the M4 and A55 corridors and in rural Wales? What measures does he propose to enhance the quality of life throughout rural Wales following the publication of the rural White Paper last year?

Mr. Hague: I thank my hon. Friend for his welcome for the new targets that have been set for the Welsh Development Agency. The rural White Paper published last year demonstrated the importance that we attach to the future of rural areas of Wales. I shall today publish the 1997 review of the White Paper, which is an important step in the process of building a prosperous countryside and a healthy environment for rural Wales. That will include such matters as a further round of the schools technology initiative, broadening the coverage of the rural transport innovation grant, a new native woodland challenge scheme and new advice on encouraging village shops and other services in rural areas.

Mr. Alan Williams: Does the Secretary of State recall the constructive meeting that he had with a deputation of south-west Wales Members two months ago? Does he remember that we made it clear that we in no way regret that so much industrial development is going to south-east Wales but that we are living in the shadow of Cardiff and Newport and fear for the fact that little or no development is occurring beyond Bridgend? Does he remember giving us certain assurances in relation to his use of discretionary power? What action has he taken in the intervening two months to implement that agreement?

Mr. Hague: Yes, I well remember the meeting with the right hon. Gentleman and his colleagues. As he said—I hope that other hon. Members were listening—a great deal of industrial development has taken place in south-east Wales. It is time to ensure that that success is spread right across Wales, including to the areas that the right hon. Gentleman has represented. That is why I have set the Welsh Development Agency a new target of 50 per cent. of the new investment and jobs that it attracts to Wales in the coming financial year being outside the eastern M4 and A55 corridors. That is a major increase in the targets for those areas. I have also asked the agency


to pay more for projects going to the areas that have not yet been the principal beneficiaries of inward investment than for equivalent projects elsewhere.

Mr. Llwyd: I have heard the Secretary of State congratulating himself so many times this afternoon that it is rather disturbing—one wonders whether he is serious about all this. I welcome his difference of emphasis on investment and job creation outside the M4 corridor and north-east Wales. May I ask him a serious question? What is he doing about youth unemployment? Does he know, for example, that north Wales has pockets of youth unemployment as high as 33 per cent? What on earth is being done to tackle that extreme problem?

Mr. Hague: What I am doing about youth unemployment in Wales is to bring more jobs to Wales than we have seen in modern times. That has an impact on youth unemployment as well as on unemployment generally. Of course, it is important to ensure that the benefits of that are shared throughout Wales. To tackle youth unemployment, in the coming year I am also increasing by £12 million—nearly doubling it—the budget for modern apprenticeships in Wales, so that young people will have the skills to take up those jobs.

Oral Answers to Questions — ATTORNEY-GENERAL

Young Offenders

Mr. Sweeney: To ask the Attorney-General what steps he is taking to reduce delays in dealing with young offenders. [18851]

The Attorney-General (Sir Nicholas Lyell): The Crown Prosecution Service has well-established teams of specialist prosecutors to handle youth cases, which are working closely with the other agencies to develop methods of speeding up those cases. Those include the introduction of pilot schemes for lawyers in police stations, which enable police officers to obtain immediate advice on the charging of youth offenders.

Mr. Sweeney: Will my right hon. and learned Friend take on board the fact that there is widespread concern in the Vale of Glamorgan about young offenders who commit fresh offences while waiting to be dealt with by the courts? Those offenders also tend to forget why they are in court if there is any significant delay. Does he agree that the CPS and all the other agencies involved in the criminal justice system have an important role to play in avoiding unnecessary adjournments and speeding up justice?

The Attorney-General: My hon. Friend has great practical knowledge of both prosecution and defence and he will know from that how important it is to bring offenders promptly before the courts before they continue a spree of offending. The CPS, the Home Office and others are working together closely to tackle the issue.

Mr. Alex Carlile: Does the Attorney-General agree that it is not just the problem of delay that is creating difficulties with youth crime, but the system itself? Does he agree that there is scope for considering, for example,

the introduction of an equivalent to the Scottish children's panel system, which has proved much more effective than youth courts in preventing young people from committing additional crimes? Does he not think that we should now take a root-and-branch look at the way in which youth crime is dealt with and not merely tinker with issues such as delay?

The Attorney-General: I agree to the extent that there are a number of ways in which one can approach youth crime. The police and the CPS are already making strides with interesting initiatives, one of which I saw last Thursday in Aylesbury. There is a broad spectrum of possibilities and the problem can be tackled in many effective ways, not only through the courts.

s Mr. Ian Bruce: Does my right hon. and learned Friend agree that the Home Office and his Department are working vigorously to try to speed up the prosecution of young offenders, but that we are being delayed by Opposition Members, who talk tough on crime and promptly delay the passage of some of our crime laws? Is it not absolutely clear that the only way in which we will tackle the problem properly is to have another five years of Conservative government?

The Attorney-General: My hon. Friend puts his finger on the curious and muddled policy of the Opposition, which will be tested carefully over the next six weeks and about which they can think further in opposition over the next five years, after which they may come up with something better. My hon. Friend and I realise that there is a small hard core of young offenders who need to be dealt with rapidly and effectively and on whom the Government are targeting their efforts.

Mr. John Morris: Will the Attorney-General take account of the fact that while youth crime has risen by 35 per cent. in the past decade, the number of young offenders dealt with by the courts has fallen by the same proportion? Reducing delay is important, especially for persistent young offenders, but it is only part of the problem. What consideration has he given to the criticism of youth justice by the Audit Commission and others? Does he not consider it extraordinary that there were no proposals to reform youth courts in the recent Government consultative paper? What are his views, given his remit and drawing on his experience, on responsibility for the Crown Prosecution Service?

The Attorney-General: The right hon. and learned Gentleman is not wholly correct. Several proposals put forward recently by my right hon. and learned Friend the Home Secretary have particular application to youth courts, as well as to courts generally. However, there are also specialist aspects that deserve further attention, which they will receive. The right hon. and learned Gentleman must remember that the problem with youth crime is the comparatively small number of multiple offenders—also a symptom of adult crime—who must be brought rapidly before the courts and, if necessary, put out of circulation with swift custodial penalties.

Stephen Lawrence

Mr. Winnick: To ask the Attorney-General what discussions he has had with the Director of Public Prosecutions regarding the murder of Stephen Lawrence. [18853]

The Solicitor-General (Sir Derek Spencer): My right hon. and learned Friend and I meet the Director of Public Prosecutions frequently to discuss matters of departmental interest, and I have been kept informed about the case.

Mr. Winnick: Is this not a case where, so far, evil has triumphed over justice? Is it not a matter of deep regret that no one has yet been brought to justice for a racially motivated crime of murder that was committed nearly four years ago, despite the fact that a newspaper has named the people whom it considers responsible for that terrible crime? What will the authorities do to try to ensure that those who put Stephen Lawrence to death will at long last be brought to justice?

The Solicitor-General: The hon. Gentleman is quite right that it is a great injustice that those responsible for the killing have not been brought to justice. However, he might like to bear in mind the words of Mr. Justice Curtis, who heard evidence on the voir dire at the Old Bailey from a person who said that he had witnessed the killing. Having heard the only witness on whom the private prosecution relied, the judge said:
Where recognition or identification is concerned, he simply does not know in ordinary parlance whether he is on his head or his heels.
In directing that the evidence should not go to the jury—and I commend these words to the House—the judge added:
To do so would amount to an injustice. Adding one injustice to another does not cure the first injustice done to the Lawrence family.

Mr. Nicholls: Does my hon. and learned Friend agree that it does not impugn the sincerity of the hon. Member for Walsall, North (Mr. Winnick) to remind him that if the qualification to the right to silence had been in operation when the murder occurred, the outcome might have been very different? Perhaps he would remind the House, and the public at large, that Labour voted against that reform.

The Solicitor-General: As my hon. Friend said, Conservative Members do not find it easy to forget that, in contradistinction to Opposition Members. He knows from his discussions with people who practise in the courts that the modification of the right to silence that we introduced in the teeth of protest and opposition from the Labour party is bringing great benefits. People answer questions more freely in the police station, and they go into the witness box in court.

Mr. MacShane: Will the Solicitor-General join me in congratulating the Daily Mail on ensuring that the issue does not escape the public gaze? Will he also join me in praising the Prime Minister on the remarkable rebuke that he gave last week at Prime Minister's Question Time to the hon. Member for Wolverhampton, South-West (Mr. Budgen), who tried to make race an issue? Will he

condemn the Conservative Members of Parliament in the west midlands who are meeting in a conspiracy to seek, once again, to make race an election issue in British politics—something that British people of all colours will utterly reject?

Madam Speaker: The hon. Gentleman's question is well away from the substantive question.

The Solicitor-General: As a former Member of Parliament for Leicester, South, which had about 19,000 Asian constituents, I do not need lessons on the importance of race and the vileness of racial crimes from the hon. Gentleman or any of his hon. Friends. We have been in the vanguard in tightening up the law to ensure that a wider range of incidents involving racial misconduct are treated as criminal offences. As for the Daily Mail, we live in a free society with a free press. The hon. Gentleman might not be quite so supportive of that paper's actions if evidence comes to light relating to those against whom charges were dismissed in the magistrates court and a prosecution is brought against them. I say that because, unfortunately, the likelihood of an abuse-of-process argument succeeding on the grounds of prejudice has been increased by such publicity.

Information Technology (Serious Fraud Office)

Mr. John Marshall: To ask the Attorney-General if he will make a statement about the use of information technology in the Serious Fraud Office. [18856]

The Solicitor-General: The Serious Fraud Office makes significant use of information technology, both to support its investigations and to present complex material at court.

Mr. Marshall: I welcome the publication today of figures recording the fourth annual reduction in crime—an historic first for this country—and congratulate Mrs. Wright on her appointment as head of the SFO. But will my hon. and learned Friend look at Mrs. Wright's comments on the sophistication of juries? Does he not believe that we should revisit the views of the Roskill report and decide that serious fraud is too serious a matter to be considered by unsophisticated jurors?

The Solicitor-General: My hon. Friend is quite right about the crime figures. It is a great pity that we have not had more support from the Labour party for our campaign on law and order in the past five years—perhaps we shall hear a little more from it in the next few weeks. I am sure that my hon. Friend will want to join me in congratulating Mrs. Wright on her appointment as the new director. She is experienced in prosecuting and regulation, and I am sure that the House will wish her well. As for my hon. Friend's last point about jury trials, as he knows the Government are considering alternatives to jury trial in serious and complex fraud cases.

Fraud

Mr. Tony Banks: To ask the Attorney-General what measures the Serious Fraud Office has recently taken to reduce fraud. [18857]

The Attorney-General: The Serious Fraud Office continues to enhance its ability to investigate and detect, and thus deter, serious and complex fraud, including by the ever more sophisticated use of information technology, both to marshal and analyse documentation and to present cases to the jury.

Mr. Banks: How can anyone take seriously a Government who talk about restricting and dealing with serious fraud yet who allowed Asil Nadir to escape from this country? We are still waiting to know what they are going to do to get him back. He gave £400,000 of stolen money to the Conservative party. What about Mr. Octav Botnar, who gave stolen money to the Conservative party? When can we expect to see that money returned? And what about the Greek fascist, Mr. Latsis? How can the Attorney-General talk about serious fraud when all his party is a fraud; the Conservative party is funded by fascists and crooks.

The Attorney-General: The hon. Gentleman is, once again, more interested in ranting than in facts. First, he might remember that the SFO stands ready to prosecute Mr. Asil Nadir as soon as he returns to this country from Northern Cyprus, with which we have no extradition

treaty, and his duty is to return as soon as possible. Secondly, the hon. Gentleman might remember that, during its eight and a half years of existence, the SFO has prosecuted almost 160 very large frauds. It has achieved the conviction of more than 62 per cent. of all defendants, but—even more important—in more than 75 per cent. of cases it has obtained the conviction of at least one person and, when only one person has been convicted, that has almost always been the chief architect of the fraud.

Sir Ivan Lawrence: Does my right hon. and learned Friend agree that the participation of ordinary members of the public in the criminal justice system through sitting on juries—even on juries in fraud trials—is one of the reasons why the criminal justice system can reassure people about its fairness, and is also the surest protection of the liberty of the individual?

The Attorney-General: The importance of the jury system has motivated and governed the actions of the Government for more than 18 years. In some recent cases it has proved difficult adequately to prosecute the full ambit of fraud against an individual, which is why the Government have indicated that they will look again at that issue. However, my hon. and learned Friend raises an important point, of which we shall not lose sight.

Business of the House

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): With permission, Madam Speaker, I should like to make a short business statement.
In the light of the announcement made earlier today by my right hon. Friend the Prime Minister, the business for the rest of this week will be rearranged. The House will also wish to know that Parliament will be prorogued on Friday 21 March.
I shall be tabling a motion later today, which will be set down for the commencement of business tomorrow. That will enable the House to conclude the remainder of its business in an orderly manner, which I trust will be for the convenience of the whole House.
Following discussions through the usual channels, which are already under way, I shall make a business statement later today setting out the detailed business for the remainder of the week.

Mrs. Ann Taylor: I thank the Leader of the House for that statement—it is good to have my predictions from last Thursday's business questions confirmed as being correct. We are, of course, co-operating through the usual channels to deal with outstanding business as effectively as possible and we look forward to receiving further details from the right hon. Gentleman later.
In the meantime, will the right hon. Gentleman confirm that Question Time will operate as usual up to and including Thursday this week? So that Members of Parliament are as fully in the picture as possible at this stage, will he confirm that, when the House prorogues on Friday 21 March, it will not meet again and that Dissolution will be through proclamation?
Finally, needless to say, Labour Members are very glad that the campaign has come for real at last.

Mr. Newton: The hon. Lady will recall that I refrained from announcing any recess dates last Thursday and, indeed, from commenting on her predictions or speculation, which I would not then have been in a position to confirm. I can confirm that it would be my

expectation that questions will proceed as normal. Those are probably the only points in her remarks on which I need to comment.

Sir David Steel: Will the Leader of the House confirm that his announcement has two effects: first, that some 28 Bills will have to be either passed through the House in the next few days or dropped altogether, which hardly seems to be the best way of concluding legislation; and, secondly, that, coupled with the press statement from No. 10 Downing street, he has announced the longest election campaign in this century, with three weeks of phoney war before Dissolution and three weeks of real campaigning afterwards? Should he not come to the Dispatch Box and apologise to the House on behalf of the Government for being, in the words of Charles II, such
an unconscionable time dying"?

Mr. Newton: I see no reason whatever to apologise to the House, either on my own behalf or on that of my right hon. Friend the Prime Minister. It remains to be seen how phoney the war will be. I can assure the right hon. Gentleman that my party will be fighting vigorously throughout the period in question.
As for the Bills on which proceedings have not been completed, I can of course confirm that there are a significant number of them. Precisely how they will be dealt with is what is under consideration via the usual channels and will be the subject of the business statement that I hope to make later today.

Sir James Molyneaux: Will the Leader of the House prevail on the usual channels to ensure that the Northern Ireland business set down for Wednesday will not entirely disappear? I assure him that we shall do all in our power to facilitate an easy passage for those vital matters.

Mr. Newton: I am grateful to the right hon. Gentleman. I shall certainly try to reciprocate by being as helpful as I can.

Several hon. Members: rose—

Madam Speaker: Order. Questions have been put to the Leader of the House about his statement, and he has been good enough to say that he will come to the House later today with a substantive statement. This one is very narrow, telling us what many of us already know—but I thank hon. Members for coming in to hear it anyway. Meanwhile, we look forward to hearing from the Leader of the House again later this afternoon.

Orders of the Day — Building Societies Bill

Considered in Committee.

[SIR GEOFFREY LOFTHOUSE in the Chair]

Clause 1 ordered to stand part of the Bill.

Clause 2

MEMBERSHIP AND LIABILITY OF MEMBERS

Mr. Peter L. Pike: I beg to move amendment No. 1, in page 2, line 20, after second 'member', insert
'of two years' standing or more.'.

The First Deputy Chairman of Ways and Means (Sir Geoffrey Lofthouse): With this, it will be convenient to discuss amendment No. 2, in page 2, line 21, after 'member', insert
'of two years' standing or more.'.

Mr. Pike: In view of the announcement made a few moments ago by the Leader of the House, it must be doubtful that the Bill can now make progress. It has not yet been to the other House, and it would be extremely unusual to force through a Bill at this stage and to gain the approval of the other place in such a short time—before proroguing on Friday of this week.
In last week's Second Reading debate, I mentioned that the Bill was defective, which is why I tabled the amendments, which would require two years' membership before anyone could share in any windfall payments that accrued to the members of a building society as a result of its conversion to plc or bank status.
I recognise that the amendments are not necessarily the best way of achieving that; indeed, I am sure that the Minister will say that they are defective. The Minister was challenged last week about whether the Bill would be able to make progress. I know that she has been committed to it in good faith from the outset, although there has been some doubt about the Government's commitment. I know that the Minister has done all that she can to ensure that the Bill makes progress. I also know that she shared the disappointment of many when it did not feature in the Queen's Speech last autumn.
The amendments would stop people deliberately joining societies with only one view in mind: to qualify for payments in the way that I have described. That is not what conversion is about.
People are entitled to hold differing views as to whether conversion is good or bad. People know that I very much want mutuality to continue. The assets and the value of a society have been built by generations of its investors and borrowing members, over 100 years or so, and on conversion what has been built up on a mutual basis is handed out to those who happen to have become new members. It is wrong for people to choose to become a member only to qualify for a handout on the society's conversion.
I am sure that the Minister is aware that the amendments are defective. I had hoped that the Government would table an amendment, or that a Labour Front Bencher would see to it, because I know that my hon. Friend the Member for North Warwickshire (Mr. O'Brien) agrees with the principle behind what I am arguing for. However, we all realise that, if we want the Bill to complete its passage, we might have to do some compromising. I now have grave doubts on whether it is feasible or possible for the Bill to be passed, as it has not even gone to the other place, but we shall have to note what the usual channels do and the contents of the business statement. We have no alternative now but to debate the Bill, in the hope that it makes progress.
I echo what the Nationwide building society said in a letter to several hon. Members last week. It supports the two-year concept, but if that cannot be included in the Bill, it would prefer the Bill to pass rather than to fall because of a flaw. That is also the view of the Building Societies Association.
If the Bill is to complete its passage, we must compromise and accept that the amendments will not be passed because of the difficulties that they would encounter—I presume that the other place would argue more about this. There would be no progress if there were great issues of debate on this matter and on the other matter of contention, the five-year issue, which we shall debate later. Those were the two main issues. The Government have also tabled some drafting amendments.
Although I strongly believe that such a move would be in the best interests of the Bill and of the building society movement, if we are told that, without the amendments, the Bill stands a better chance of progressing and receiving Royal Assent before Parliament dissolves, I shall be prepared not to press my amendments to the vote.

Mr. John Butterfill: I support the hon. Member for Burnley (Mr. Pike). As you will be aware, Sir Geoffrey, I raised this issue on Second Reading and I have a great deal of sympathy for the sentiments that he expressed.
We have all found unedifying the spectacle of carpetbaggers moving small sums round the country, from building society to building society, in the hope of making a quick profit on demutualisation, and I believe that there is broad agreement across the Committee that it would be desirable to do something effective to prevent that happening. I, too, appreciate that there are problems in achieving that object, but it seems wrong that short-term speculators can put their money into a building society, build up a head of steam in speculation about how it might be taken over and bring pressure to bear for a takeover to take place, in the expectation that they will make a pile of cash.
Many of those people have no interest in the community in which, very often, the building society originated. Many have no interest in the building society or in the well-being of other depositors or of borrowers. They are motivated purely by greed, and if it were possible to have a mechanism that prevented such speculation, that would be good.
My hon. Friend the Minister has examined that in some detail and is of the view that there is no way by which speculation can effectively be prevented, except that


building societies can make rules as to how depositors may be treated: for example, that they may not immediately acquire rights, and that they may be required to make a larger deposit than usual. However, such rules are unsatisfactory, especially the requirement that investors make a larger deposit, because that would rule out the small depositor, for whom building societies were first set up.
It is extremely important that there remains a savings vehicle that is appropriate to small investors—where small investors do not carry a lot of risk; where no huge costs are involved when they invest their money and save; and where they can receive an excellent and personal service. Raising the threshold is not the answer to that. Nor would the problem be solved if the building society changed its rules, because no society would be protected from an aggressive, hostile bid by a predator offering shares to building society members and thereby overcoming all the other mechanisms that can be put in place to prevent speculation.
3.45 pm
I very much share the views of the hon. Member for Burnley and want the Bill to succeed, as does the Building Societies Association. If there were a mechanism by which we could prevent speculators from engaging in their nefarious activities, I should be the first to support it.

Mrs. Diana Maddock: I have much sympathy with the views expressed by the hon. Members for Burnley (Mr. Pike) and for Bournemouth, West (Mr. Butterfill). Many of us who spoke on Second Reading are concerned about small depositors, the local nature of building societies and the important place that they have in local communities. When societies move to plc status, we have seen people with no particular interest in the society, which has built up its assets over a number of years, rush in, desperate to get money. It is its long-standing members who have provided those assets.
I have sympathy with the amendments but fear that, as the hon. Member for Burnley said, they do not do exactly what we should all like. I am particularly concerned that if they were passed, some members would be excluded from some of the rights of membership, for example, taking part in annual general meetings, voting for directors, nominating candidates to stand as directors, and so on.

Mr. Pike: I assure the hon. Lady that that is one reason why I would not wish to press the amendments to a vote; I recognise that they would, as she rightly says, bar people from doing many of the things that we would like them to do.

Mrs. Maddock: I think that we all agree that, up against the time scale of a general election, and however much we would like to get this right, we shall barely be able to get the Bill on the statute book. Although I agree with the principles behind the amendments, we are not in a position to get them right today. Therefore, I cannot support the amendments as drafted.

Mr. Peter Bottomley: I declare a mild interest, in that a building society in which I am involved is converting and I expect to make a minor gain.

Mr. Tim Smith: How much?

Mr. Bottomley: It depends on the price of the shares.
We should be aware that if the Bill survives the discussions between the usual channels and becomes an Act by the end of this Parliament, it will have to have gone through another place as well. If there is merit in the arguments and if those who advise my hon. Friend the Minister, whom we welcome to the Front Bench for the debate, are able to take a more positive way forward, that would be greatly welcomed.
There is general agreement that something might be done, although there is not yet agreement on what should or could be done. We should be aware that the amendments are being discussed in the context of the possible raid on the Co-operative Wholesale Society and the co-operative retail societies. The issues that have been developed and the pressures of the people who want to carry out what might appear to be a smash-and-grab operation are worthy of discussion. It should not be a party political issue, and I am glad that this debate has not been conducted in those terms. It may be a good start to the prospective general election campaign.
We should realise that of the societies that are converting, some will survive as banks and general retailers of financial services, and possibly as wholesalers as well, and some will be taken over. People know that. We must avoid pressures that would not allow people the choice of keeping the mutual building societies going. That is what is behind these amendments and other possible amendments.
Twenty years ago, the insurance companies came under pressure for many of them to drop their mutual status. Fortunately, some did not drop their mutual status. Companies such as Equitable Life and Norwich Union, which is now converting, and others over the past 20 years have helped to protect the customers of insurance services and to give them a broader choice. They were willing to look to the long-term interest and to go in for long-term investments, rather than always going in for short-term performance.
Without criticising those that have been receiving attention in the business pages and sometimes the front page of newspapers because of enormous bonuses, I think that the building society movement and the mutual insurance companies in the United Kingdom, including those in Scotland, have done a great deal of good. They have enabled ordinary people to do ordinary things, and they have achieved extraordinary results in terms of building up wealth and home ownership. I believe that their future will not be exactly the same as the present. It is more likely to take in the other end of the life cycle. Many of the elderly, who may be asset rich but housing poor, deserve ways of turning a capital asset into an income and a secure home in good condition, but that is not a subject to be pursued in the debate on the amendments.
Many societies have converted, and more will. We should recognise that the people whom I perhaps exaggeratedly described as smash-and-grab merchants are taking from the pockets and purses of the long-term savers


and investors. There will always be a degree of rough justice, because many people who have saved with the building societies—for every borrower, there are between six and 10 genuine savers and investors—have had current accounts, and have been excluded anyway by the terms of conversion. They are willing to accept that, but those who have been long-term investors may not want to share what would become theirs on a conversion with people who have come in for the sole purpose of putting in a relatively small sum, to get a pretty large return from it.
There could be large sums swilling around the financial system. It is destabilising if a building society suddenly gets a great rush of money that it cannot use, and it is destabilising if those who joined become organised and start applying pressure through votes at members' meetings to change the nature of the society, when most of the existing members do not want that.

Mr. Butterfill: It has been suggested that one reason why we should not tolerate the amendments is that they would prevent people from voting at annual general meetings. Does my hon. Friend agree that that might not be a bad thing, if people were attending only to vote for demutualisation, to line their pockets?

Mr. Bottomley: I remember one of our colleagues saying after the elections in what was then Southern Rhodesia that one cannot always predict the result of a vote. We should be careful about saying that people should be allowed to vote only if they vote the way that we want. Developments that have taken place in this country over the past few centuries have resulted in people being allowed to make their own mistakes. I hope that in building society votes and in general elections, they will not do so.
In summary, we face a dilemma. It is generally agreed that the principle behind the amendments is sensible—although we do not know whether they will achieve precisely the desired objectives. On the presumption that the Bill could become an Act in the next two or three days, I ask my hon. Friend the Minister to consider whether there is some way of fulfilling the purpose of the amendments. If there is not, I suspect that we shall have to do what many in the building society movement have done and say that this Bill is better than none at all.

Mr. Austin Mitchell: I support wholeheartedly the comments of the hon. Member for Eltham (Mr. Bottomley). I apologise for not being here to move the amendment, but I did not expect that the business statement would be so short and that our investment in timetabling next week would disappear. It was a little like "The War of the Worlds", when people climbed the platform of the spacecraft and found that the invader from Mars was dead and that everything had vanished. I was similarly amazed today.
If we were considering the legislation in the normal manner, I would press the amendments to a vote and seek a statement of principle. It is an important principle, and an important defence of the mutual principle for building societies. However, we are not in a normal situation. I wish I knew exactly what situation we were in—perhaps the Minister will tell us. I hope that we are not wasting time this afternoon finalising legislation that cannot pass through the House of Lords because of the

way in which the Government have junked their timetable, in their desperate desire to suppress my proposed hairdressing Bill that was due to be considered next week. Obviously, the Government dared not meet the challenge posed by my Bill and the defeat that they would almost certainly suffer, so they have scuttled business and cut and run.
If the Minister cannot assure us that the legislation will pass through the House of Lords—it has not yet passed through the House of Commons—we are legislating in a messy manner. We do not know whether our actions will have any effect. We must discuss the Bill because it provides a chance to make necessary changes within the building society movement. It is a comprehensive measure, so we should try to make it as good as possible. I resent being told, "Drop this," or "Don't vote on that," or "Let this go," simply in order to ensure that the Bill is passed. It will be a long time before an incoming Government can consider the legislation again. We should not be in that situation in a dying Parliament. That is my dilemma, and I hope that you are as upset as I am, Sir Geoffrey.
I now move to the substance of the amendments, which are quite simple and straightforward. They seek to erect a defence of the mutual principle. Too many people have learnt their ethics from the privatisation procedures in this country and there has developed a species of what I would call the monetary ram raider. Such people rush to put money in building society accounts on the advice of columnists in the financial pages of newspapers, who urge, "Put your money in the Snurple building society, because it is going to demutualise and you will have a big gain." That causes a rush of new members and of new money. It also creates a brute voting force in favour of demutualisation, which may not be in the interests—I think that it is certainly not in the interests—of the long-term members of the society. The new members wish to get a quick result because, as I said last week, their ethics are the same as those of Wilfred Pickles and the Halifax building society: "Give us the money, Barney." It does not matter about principle or the abdication of 100 years of toil, sweat and endeavour.
The amendments seek to erect a barrier against such activities. It is right that building societies should have that barrier, because they are driven to all sorts of expediencies in an effort to maintain continuity and to control the rush of new members. Some have said that people may open new accounts only if they invest a minimum of £1,000. Other societies have tried to devise their own rules governing the voting rights of new members. The amendments take care of both issues: the time scale beyond which people may vote on the affairs of the building society, and beyond which they may benefit from the redistributions that they may have joined the building society specifically to receive.
It is a matter of basic principle. I hope that the Minister will come to the Dispatch Box and tell us that, because of our courtesy, charm and consideration, she will not force further debate and will accept the principle behind the amendments before the legislation goes to another place.

4 pm

Mr. Mike O'Brien: Discussions on the progress of the Bill may well be taking place as we speak. There will be a further business statement later


in the day. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) need not be too despondent. There is reason for hope yet. We, the Opposition, are actively supporting the Bill. I retain the hope that it will become law.
I declare an interest before speaking to the amendments. I have an account with one of the converting building societies. I would not be surprised if it were the one not too far from the hon. Member for Eltham (Mr. Bottomley). It is, in fact, the Woolwich.
As my hon. Friend the Member for Burnley (Mr. Pike) said, there are strong arguments for a two-year rule. During consideration of what became the Building Societies Act 1986, the Government were strongly in favour of a two-year rule. Why have the Government changed their mind on that ground given the strong arguments that were advanced by Lord Brabazon of Tara in another place in July 1986? He said:
It is important that the conversion provisions work to prevent speculative flows between societies on rumours of an impending conversion. I gather that is what happened in America in certain situations, and that is what we seek to avoid happening in this sort of situation.
He added:
It is clearly important that
there should be some legislation in relation to transfers of societies. He explained:
Otherwise, for example, a society could tempt investors into it in order to vote in favour of a conversion with the promise of an immediate cash bonus; or just such speculative flows as I just mentioned might be started if it seemed a society might transfer to an existing company."—[Official Report, House of Lords, 10 July 1986; Vol. 478, c. 539.]
Those were the reasons why the Government, at that stage, were strongly in favour of a two-year provision whereby those who were members of building societies would not receive benefits unless they had been members for two years.
The Labour party has said that it sees strong arguments for that. We have, however, discussed the issue of the two-year provision at some length with various mutuals. On balance, the Building Societies Association and other mutuals, although they would prefer a two-year clause, are concerned that nothing should be done to jeopardise the Bill. In the present circumstances it is important that we should press on with the Bill.
I have been persuaded that the BSA wants to see the Bill through Parliament as a priority. It regards the measure as essential. It has asked that Labour takes no steps that might jeopardise the Bill by way of introducing a substantial amendment. I have listened carefully to those representations and have decided to accept them.
We want to see the Bill become law as soon as possible. It is right, however, that Parliament should be able to express its views, especially on a two-year clause. Before I ask the Minister some questions about such a provision, I acknowledge that my hon. Friend the Member for Burnley (Mr. Pike) has agreed to withdraw the amendment. At the same time, my hon. Friend the Member for Grimsby has strong concerns. It is right, therefore, briefly to mention technical deficiencies.
I am concerned that the amendment would not achieve the end that my hon. Friend the Member for Burnley seeks. The intention appears to be to ensure that only

those who have been members for two years on completion would benefit. That is not precisely the effect of the amendment. It is unsatisfactory, therefore, from a drafting point of view. The amendment states, in effect, that someone can be a member of a society only if he has been a member for two years. Presumably the aim is to deny benefit, but the amendment appears to deny membership itself. Furthermore, the phrase "two years' standing" is rather vague. It presumably means two years from opening an account, but it does not say that. On drafting grounds alone, the amendment is questionable.

Mrs. Gwyneth Dunwoody: It is odd to me—I have been here only a short time—to hear hon. Friends on the Front Bench talking about drafting. I should have thought that as we are the Opposition, we would be concerned about the principle. I have listened with great care to my hon. Friend the Member for North Warwickshire (Mr. O'Brien) saying that we must not accept any substantive change because we would otherwise lose the Bill. I ask him to think seriously about what he is saying. Is he saying that even though there may be substantial difficulties with the legislation, we would prefer it to go ahead?

Mr. O'Brien: We are saying that the Bill is essential to safeguard the future of mutuals. It may be desirable to have a two-year provision; that is a point that hon. Members are quite properly discussing and I intend to return to the principle in a moment. We have, however, to bear reality in mind in view of the announcement made today.
My hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) will know that as a result of that announcement, there is enormous pressure on the timetable. As we want the Bill to go through, maximum agreement is needed between Opposition Front-Bench Members and Ministers. I hope that the Bill also has the support of the House as a whole. Getting the Bill through is our objective, which has an effect on the way in which we are dealing with the two-year provision and later amendments.

Mr. Austin Mitchell: We are in a negotiating situation. In those circumstances, it seems rather misguided to give away our hand before we are told the Government's position. The Minister may accept the two-year principle; there is still time for her to do that. Whatever deficiencies the best drafting brains in the House of Commons—I refer to the Clerks and not to me—have left in the amendment, the principle is important. If we accepted the amendment this afternoon, the Bill would not be delayed seriously unless the Government chose to make an issue of it and to dredge up their troops, thus wasting the time of the House. We should not think that we have a weak hand.

Mr. O'Brien: My hon. Friend's views will be taken on board by those of us who are dealing with the Bill. We want the Bill to go through, however, and the sooner the better for the sake of the mutuals and building societies as a whole.
I now turn to the issue of principle. In 1986, the Government supported a two-year rule. It was the bad drafting of the 1986 Act, however, with which we are now dealing, that meant that during the Halifax merger with the Leeds, the decision was made that the normal


two-year qualifying rule could be circumvented if the distribution was made in shares and structured in a certain way.
It is clear that in 1986, Ministers intended that a two-year rule should be effective, but legal judgments in the early conversions and takeovers widened the interpretation of the statute to allow changes of status based on offering pay-outs to members on a scale and in a manner that were not intended in the 1986 legislation. That has encouraged mere speculators—so-called carpetbaggers—to open many accounts.
The building societies' response has been to raise the threshold for new accounts, but that has prejudiced, as has been mentioned by the hon. Member for Bournemouth, West (Mr. Butterfill), the interests of many low-income people who want to open an account for a non-speculative, bona fide reason. Do the Government consider that speculation desirable? Will they now explain why they have changed their mind and oppose a two-year clause? Do they intend to allow the queues of speculators and the high thresholds to remain? Do they consider that building societies' assets that were built up over generations belong to the members who have an interest in the long-term future of those building societies? At the moment, they are often expended to those who have little claim to building societies' assets. Do the Government find that satisfactory?
In other cases, the Government have accepted qualified membership, for example in terms of calling emergency general meetings and, in clause 37, for obtaining particular information. Why was that justified, yet the Government have changed their mind and now say that qualified membership under a two-year rule is no longer right in respect of benefits?
Speculation is still an enormously serious issue. The head of corporate relations at the Birmingham Midshires building society wrote to me recently as follows:
We opened some 80,000 speculator accounts in 1996 and, year-to-date since January, we are opening three times normal levels per week compared to the pre-speculation days of 20 months ago. In addition, to counter those who think it has peaked, it is worth noting that around £145 billion of savers' cash has been locked up with the converters for the past two years or so. This will now become unlocked, creating a new wave of speculators given that distribution plans have now been unveiled by the converting societies.
There is clearly an issue for the Minister to address.

Mr. Douglas French: Is the hon. Gentleman aware that some building societies, such as the Portman, have found it possible to deal with speculators not by raising the minimum deposits on their account, but by welcoming anyone who wishes to open an account on the basis that the society is firmly committed to mutuality and no speculation will yield any benefit to the speculator?

Mr. O'Brien: I am aware that a number of building societies are using sometimes ingenious ways of addressing the issue, but the hon. Gentleman makes the point that it is clearly a matter of concern to many building societies, including the Portman. We need to know the Government's view.
The only real explanation for the absence of the two-year clause that the Minister has offered so far is that building societies themselves can devise a scheme to

ensure that investors obtain no benefit from conversion. That is possible in theory. However, a conversion or takeover scheme that is influenced by a hostile predator might mean that the society would be unable to enforce such a restriction. A society is not in a position to deter speculative inflows by its own two-year clause, as those contemplating a speculative bet would simply reason that the building society would be unable to uphold the rule when confronted by a hostile bid.
The Minister also deployed the argument that those expecting a bonus in future should be on the same footing as those who have received a bonus in the past. If defective legislation were passed, as it was in the 1986 Act, and if Parliament's will and intention in the 1986 Act are frustrated because of inadequate drafting, are the Government saying that there should be no attempt to alter the Bill because someone has benefited by frustrating Parliament's will in the past?
Neither of the arguments deployed so far seems to hold a great deal of weight. However, in her reply to the debate the Minister may supply us with other arguments that address the issue. Obviously, we are anxious for the Bill to become law and we do not want to frustrate its course, but we also want to be sure, as hon. Members have a duty and a responsibility to do, that we discuss the issues fully and ultimately make good law.

Mr. Tim Smith: I have considerable sympathy with what the hon. Member for Great Grimsby (Mr. Mitchell) had to say about the amendment. First, I agree that it is not a satisfactory way in which to legislate. The Bill comprises 47 clauses and nine schedules, all of which are being taken on the Floor of the House and will not receive the detailed consideration that they deserve and would have received in Standing Committee. I understand that the Bill was subject to very wide consultation with interests outside the House, which is obviously welcome, but it is not some substitute for parliamentary consideration. It is right that we should put forward the views of our constituents—many of whom will be members of building societies—on the Bill's detailed provisions. I do not really understand why the hon. Member for North Warwickshire (Mr. O'Brien), who spoke from the Opposition Front Bench, is in such a hurry to get the Bill through.
It seems that the Bill is designed to protect mutual building societies, which is good. It is clearly in the public's interest that many such societies should continue because they will offer a better deal to depositors and lenders than commercial banks will ever be able to offer.

Mr. Butterfill: My hon. Friend is suggesting that the Bill is designed to protect mutual building societies, but sadly, as we have just heard, it fails to do precisely that. It allows them to do rather more than they have been previously permitted to do under the Building Societies Acts 1962 and 1986, but it does not protect them in any realistic way apart from making them a little more financially viable and a more attractive target.

Mr. Smith: That was what I meant when I used the word "protect". It is because such building societies will have greater commercial freedom that they may be less tempted to go down the public limited company route. I recognise my hon. Friend's point. Against that we must balance the apparent proposal to drop the two-year rule


that Parliament clearly wanted to impose in 1986—even though it turns out that, as the legislation was defective, the rule did not work properly. What is the balance of arguments concerning such matters and mutuality?
What worries me is very simple. It is understandable that, when a substantial financial carrot is placed in front of people, they should take it and consume it immediately. I am, however, concerned about the long term. Will people who want to borrow money for house purchase get a better deal in the long term if mutual building societies wither and die? Surely it is very much in the interest of the consumer that there should be as diverse provision as possible. I hope that the Bill will encourage societies to retain their mutual status. The question is: what is the benefit of that compared with the damage that may be done if we do not keep the two-year rule?

The Economic Secretary to the Treasury (Mrs. Angela Knight): I have considerable sympathy with many of the points that have been raised. I know that all hon. Members present have a real concern about mutual building societies, which I share.
The hon. Member for Burnley (Mr. Pike) mentioned two points in opening the debate on this amendment. He was concerned about the Bill's further progress. I can confirm that the issue of what happens after we have finished our proceedings today is being discussed at this moment. I sincerely hope that the decisions that are reached elsewhere will result in the Bill becoming law because the mutual building societies want that. His second procedural point was whether it was conceivable that such a Bill could go through very quickly. All stages of the Friendly Societies Act 1992 went through on the nod. There is therefore a precedent—one that we are not trying to emulate since we shall be giving good consideration to the Bill—of such a Bill going through very quickly due to announcements such as the one made today.
My hon. Friend the Member for Eltham (Mr. Bottomley) and the hon. Member for North Warwickshire (Mr. O'Brien) both said that they were members of a building society. I am not sure whether I am or not. When my right hon. Friend the Prime Minister gave me my present job, I was told that one of its requirements was that I am not allowed to touch anything financial whatever. Such affairs are dealt with by a power of attorney. I pay the bill, but have no knowledge about what is happening—and will not have until I no longer hold the job. The important point is that many people, including hon. Members, are involved in a building society in some way. The northern savings ethic means that many people who live in the midlands and the north are involved in building societies.

Mr. Butterfill: I represent a southern seat—one cannot get much further south than Bournemouth—so I must contradict my hon. Friend. Saving is equally prevalent in the south, and there are more building society branches in Bournemouth than almost anywhere else. We are also honoured to have the headquarters of the Portman building society in the area.

Mrs. Knight: I had no intention of excluding Bournemouth from the proceedings, and I am grateful to my hon. Friend for those points.
The debate has two components. First, there is a technical aspect and, secondly, there is the general concern behind the amendments. I will explain the technical aspects and then deal with the other matters. I understand the concerns that have been raised, especially about speculation, and the belief that the restoration of the two-year rule could deter speculation.
The amendments would restrict all the long-established rights of membership, as well as the new rights that the Bill will introduce, to those who had been savers and borrowers for two years or more. One effect of that would be to rule out share distributions to anyone who is not a two-year saver, effectively reviving the two-year rule. However, the amendments would go further and, potentially, would damage the building societies' constitutions. All savers are full members with an equal right to a say in the running of their society by voting. The amendment would introduce a category of savers who have no membership rights, but elsewhere in the Bill we try to ensure that members will not be disfranchised. All of us have, no doubt, received letters from constituents who have deposit accounts that they thought made them full members of the society. The amendments would increase that anomaly substantially.
The link between saving and membership is crucial for mutual societies. Therefore, narrowing the membership would vest control in a privileged subset of longer-established savers and would deny millions of people an equal say, even if only for a set period. Those people, for right and genuine reasons, are members of their society.
It may help if I give some specific examples. The amendments, as they are drawn, would result in the eligibility to nominate a director being vested in individuals who have been with the society for more than four years. At the moment, people have to have been members for two years. The amendments would also mean that an individual would have to be a member for four years to propose and circulate resolutions at an annual general meeting. That provision would also apply to a special general meeting on members' requisition. The amendments would deny rights to members who, for right and proper reasons, are members of their society.

Mr. Tim Smith: Is my hon. Friend saying that there are already two classes of saver, in the case of certain resolutions, such as electing directors and calling special general meetings? If there is already a distinction, why cannot we build on it?

Mrs. Knight: The distinction is that, in many instances, it is up to the society itself to choose, and I believe that it should be up to a society to make as many decisions as possible relating to its own business. One such decision is a society choosing to convert to a bank, as it sees that its future would be better as a plc than as a mutual society. How the society effects that change—especially as far as distribution is concerned—is not something that government should dictate.

Mr. Butterfill: I remind my hon. Friend of a point that time constraints prevented her from answering during the Second Reading debate. We all accept what she has outlined, but how could a mutual society protect itself against a hostile takeover in which shares were used as the consideration? Until she can answer that question, many of us will not be satisfied.

Mrs. Knight: I remind my hon. Friend that the only people who can put a resolution to members for a takeover or a conversion are the directors, and they can prevent or propose such a change in status. If he waits a moment, I will return to that point. It is very important to address the other aspect of the debate, which is the spirit behind the amendments. I am sure that we all agree that we do not like speculation and we do not feel that speculators should somehow be able to force a society to take a decision that is not in its best interests.
We have all read stories in the newspapers, which are correct, in which societies have said that they are suffering from speculation. One aspect of the matter is that people reading an article stating that a society might convert has resulted in speculation. In any event, under normal circumstances a considerable number of new accounts will be opened annually both by savers and by borrowers. About 10 per cent. of all new savings accounts are turned over in an average year. If that is the average, it means that, over a four-year period, something like a third of all savers with a society would be new savers. That is not as a result of speculation, but of natural turnover. Therefore, considerable changes are taking place as part of the normal business of societies.
Undoubtedly, there will be an influx of new accounts once the converting societies have converted. The hon. Member for Great Grimsby (Mr. Mitchell) said on Second Reading—with complete honesty—that once he received whatever his windfall might be from his converting society, he would take his money and open an account with a mutual down the road. Good for him—that is his choice, and I suspect that it will be the choice of a considerable number of members of those societies. That will result in an increased number of accounts being opened with mutual societies.

Mr. Austin Mitchell: I do not wish to promote further the names of the societies being punished and rewarded in this fashion, but I shall be taking my money from the Halifax—as soon as I get the distribution—to the Bradford and Bingley because it is to stay a mutual. I shall be doing that to support the mutual principle. The amendment deals with money that is washing around and undermining the mutual principle by being put into a society to grab a quick profit.

Mrs. Knight: My point was that there has been a considerable increase in the number of people opening accounts with mutual societies because their sentiments coincide exactly with those of the hon. Gentleman. The articles referred to earlier show that the mutual sector is performing well for its members, in terms of both savings and mortgages. The key point is that not all the new accounts that are being opened are speculators' accounts: a significant number are genuine accounts opened by genuine people for genuine reasons. I do not want those people to be disfranchised because of a small group of speculators. We need to deal with that small group.
There has been much concern, especially about disabled people but also about the wider issue of underlying beneficiaries who have been disfranchised as a consequence of the current conversion process. The private Member's Bill promoted by my hon. Friend the Member for Gloucester (Mr. French) has rectified that problem, and I do not want to accept amendments, or even the sentiment behind amendments, which would result in the exclusion of many more people, because exclusion of a particular group has been a real problem.
4.30 pm
It would be extremely difficult if we changed the two-year rule so that no member of less than two years' standing could receive anything if a society converted. At the moment many people receive something, so if we intervened the Government of the day would be inundated with requests for a change back to the situation that existed when the Halifax, the Woolwich, the Alliance and Leicester and the Northern Rock converted.
The two-year rule exists as a result of court cases brought by the societies. Whatever our views might be on that, to change back would build up a huge pressure for the future.

Mr. Butterfill: I must take issue with my hon. Friend on that point. If we were to make the amendment, which I support, future investors would know full well when they made their investment that they would not be entitled to windfall profits from a takeover or demutualisation unless they had been members for two years. They would understand that, and they would of course be entitled to receive interest on their money in the normal way. If they understand that clearly when they make their investment, I do not see what the problem is.

Mrs. Knight: It has been noticeable in the past 18 months or two years that people simply do not understand what their status is with a mutual building society and what the various accounts are. I agree that more people have that knowledge today than 18 months or two years ago, but that is certainly not true of everyone: indeed, I would suggest that more than half do not know. If my hon. Friend saw my mailbag he would realise that there is huge concern among many people who feel that the system has done them down and want the Government to change the rules.
I believe that we can withstand that pressure at the moment, because although there have been anomalies—my hon. Friend the Member for Gloucester sorted out another anomaly in an earlier Bill—the consequence, not far down the road, of making the changes in the substance behind the opening remarks of the hon. Member for Burnley would be that a greater number of people would feel discriminated against by the change in the rules and would blame the Government. Whoever the Government of the day might be, the pressure to change the law back would, I suspect, not be resistible.

Mr. William O'Brien: I support the two-year rule. Is it not a fact that when the Halifax building society decided to become a public limited company, it took on new investors and borrowers on the understanding that they would be associate members? They were notified at the very beginning that they would


not qualify for the share-out, whenever it came, because of the two-year rule. The parliamentary all-party group on building societies has been advised by the chief executive of the Halifax building society that no one who has not been a member for two years will receive any bonus. It would appear that it works and it could work if the spirit were there for it to do so.

Mrs. Knight: The hon. Gentleman has given us a good example of how a building society, when left to its own devices, can use existing law to ensure that it gets an equitable result for its members. I am concerned to leave building societies the ability to do just that—to make their own decisions as they see fit—and for their members to have the opportunity to vote accordingly.
The object of the amendment is to try to help with speculation and carpet bagging—things with which none of us has any sympathy. At present and under the Bill, only the board of a society can put a conversion or takeover proposal to members for approval. The board also has a fiduciary duty to consider the long-term interests of present and future members of the society. No outside company faced with a board's rejection can put a proposal direct to members, as happens with a public limited company.
Forcing conversion, or takeover, on a board that opposed it would take a long time. If an initiative came from outside a society, the sequence of events would work as follows. A predator would have to make an offer, which was either confidential or non-confidential, to the building society board, which would consider it. We will presume that it decided that the offer was not in the interests of the society or its members. Under the terms of the Bill, the society would disclose that a non-confidential offer was made and say by whom in time for the next annual general meeting.
The board is not required to pass on any other information and may take the opportunity to set out why it considers that the proposed takeover is not in the best interests of the society. The bidder could, for example, use the media to make the terms of its offer known to members. It would be a predator and as such would need to persuade enough members to requisition a special general meeting to consider a resolution calling on the board to pursue the proposal. The resolution could not force the directors to put a transfer proposal to a vote. If the members were persistent, they could also seek to nominate a new board of directors who were in favour of the takeover—the new directors would have to meet the fitness and properness requirements of the Building Societies Commission. They could be elected only at an annual general meeting and would need the support of the majority of the other members who voted to achieve that. Directors retire and offer themselves for re-election on a three-yearly basis. As one can see from that list, therefore, it would be a long-winded process for a predator—the initiative coming from outside the society—to try to shift a board of directors to make it put such a proposal to the rest of the society's members. It is difficult to say how long the process would take, but on any reasoned assessment, it would take more than two years.
The alternative involves the initiative coming from members. In some respects, this matter has caused the most concern. It is perceived as the Trojan horse of speculators who have joined the society and who want to persuade the society's board of directors to get it to convert. The sequence of events would be as follows. First, there would need to be sufficient members to requisition a special general meeting. The members could not table a transfer resolution. The motion at the special general meeting could do no more than recommend that the board considers options for conversion or takeover. The board would have ample opportunity to tell the wider membership precisely what it thought of such activists. The board's consideration would have to be undertaken with regard to its fiduciary duties to members, including potential future members. It could easily conclude that conversion was unwise or that an offer was inadequate. If members did not accept that, they would have to replace the board and negotiate the last two hurdles that I described earlier. Again, it is a long process.
It beggars belief that a board would sit back and do nothing. While all this was happening, the board would be telling members about the advantages of remaining mutual. Some mutual building societies, I am glad to say, are doing just that in advance, to ensure that their members are well aware that mutual status has considerable benefits for them.

Mr. Butterfill: Does my hon. Friend accept that some mergers and takeovers that have nominally taken place on an agreed basis have in fact been the result of considerable pressure by one society on another? Does she not realise that these things are a little more subtle than she suggests?

Mrs. Knight: Yes, I am aware of that. That is one reason why the Bill is in its current form. It ensures that building societies, while remaining mutual, can offer more services and so become more competitive in the mutual sector, thereby making them stronger. That will help them to flourish. Secondly, it makes changes relating to other aspects so that converted building societies, about which the mutuals are concerned, cannot become predators on the mutual sector in the way that many people have feared. Undoubtedly, the ability to compete is one key to ensuring that the mutual sector flourishes, as we all want.
The hon. Member for North Warwickshire (Mr. O'Brien) asked whether speculation was advisable; the answer is no. Why have the Government changed their mind since 1986? The world has changed since 1986, and I have explained what is behind our thinking; we cannot turn back the clock on the two-year rule. He asked whether societies belonged to members; of course they do. He suggested that there might be many more speculators after societies have converted. I honestly do not think that there will be more speculators; there will be more account openers looking for a mutual home for their savings. Many mutual societies are making that attractive and targeting that sector to ensure that such people become members.
We have achieved a compromise that ensures that both societies and their members are treated fairly. On technical grounds, I ask the Committee to reject the amendments. However, I also ask it to reject the spirit behind them, not because I believe that it is wrong but because the proposed changes could bring with them much more hardship to many more people and not deal with speculation, about which we are all concerned and which we do not want to continue.

Mr. Austin Mitchell: I confess disappointment with the Minister's reply. That it was so long suggests the depth of her difficulties. So long a reply at this stage of a Bill that, we are told, has to be rushed through, shows a defensive attitude. She never took up the basic issue of whether we want such a defence against speculation. Is it right or wrong? She went through a series of quibbles and excuses for not doing anything but as a Minister in control of drafting and, she told us, in control of the procedures of the House, she has the power to do something if she wants.
It is disappointing that she has not accepted the view of both Government and Opposition Members. I am disappointed with the positions of both Front-Bench teams but especially with her position because she has the power to enact the principle of the amendments. We have been reduced to Back Benchers, who are deeply interested in the building society movement and especially in the principle of mutuality, being against Front Benchers.
The Minister told us that the Bill will become law. I am a little doubtful about whether she can guarantee that, but that means that it is all the more important that we should perfect it and make it the best Bill that we can in the time available. It would be simple to introduce the provision, perhaps better written or better defined to get rid of all the quibbles that she raised. It would be a better Bill. If there is time, we should do it.

Mr. Peter Bottomley: I thank the hon. Member for the ghastly tie for giving way. While I basically support the principle of his amendment, my hon. Friend the Minister pointed out that in practice, it would be two years or more before ram raiders could get through. If we are talking about protection for two years, the practical point may be as important as the principle. We need to get a balance between fairness to small savers—and for that matter to not so small savers—and ensure that large numbers of small savers cannot join to try to do what most existing mutual members do not want. I am not sure that we have found a way forward. The Minister's comments are relevant, though the principle is also important.

Mr. Mitchell: The signals were clear. The Minister rightly said that there is normally a churning, a turnover, of people taking money in and out of building societies. However, when there is a flood of new applications, it is possible to discern what is going on and realise that the flood is part of a speculative bubble that has to be pricked. If the will is there, it is possible to define a basic principle and to make it operate practically. The Minister was making excuses for not doing it rather than mounting a defence against the principle that I advanced.
If there were a two-year rule, it would be an incentive for people to keep money in societies for longer, rather than for churning it in the way that the Minister described. I wish that she had accepted the principle and said, "While the hon. Members for Burnley and for Great Grimsby are most accommodating and amiable, they are not the best draftsmen in the House. It is inadequate, but my draftsmen will produce a tailor-made amendment to achieve what they want and which can go in even at this late stage." It could have been done. The building societies, Back Benchers and opinion outside want it, but we cannot have it because of the rush.
That puts me and my hon. Friend the Member for Burnley (Mr. Pike) in a dilemma because, being new Labour, we are honest, moderate chaps and we do not want to make a disturbance or put difficulties in anyone's way; we are amiable—that is the essence of our breed. We want to be accommodating, but there is an issue of principle.
We have been placed under duress by our Front Bench. If my hon. Friend the Member for North Warwickshire (Mr. O'Brien) had taken a firmer line he could have coerced concessions from the Government, which would have put the Minister in an embarrassing situation, so that she might well have had to give way to us. That is what we should have done: if someone is negotiating, he plays his hand strongly, he is not diffident and does not say, "That won't work; we can't do that." Instead, we should say, "Go for it and you'll often get it." I hope that that can become the slogan of new Labour in power, but it has not worked in this case. If we had coerced the Minister, we might have got more than we did. I am sorry, but I feel that that puts us under duress.
The proposed provision is right in principle; Back Benchers and building societies want it, but we cannot have it because the Prime Minister has opted for felo de se as a system of Government. Owing to the Prime Minister's suicidal inclinations and the junking of so much of the legislative timetable because of his terror and his inability to face up to the defeat that my hairdressing Bill next week would inflict on the Government, we are now being asked to rush through the Building Societies Bill in an unacceptable way. I regret that. The Bill would be better if it contained the two-year provision. It would have been better if we had insisted on that—I am sorry that we did not, and there is still time to do so. Under such duress I would have no alternative but to give in.

Mrs. Maddock: Would the Minister clarify the position a little? She has given many practical reasons why it would be difficult to accept the amendments to introduce the two-year rule. Will she tell us the view of the Building Societies Association when she discussed the matter with it? Although that society is anxious for the Bill to become an Act, it is concerned about the two-year rule and I wonder if she could give us some information.

Mr. William O'Brien: I want to firm up a point that I made in an intervention about the Halifax building society and its acceptance of the principle of the two-year rule. As the Minister said, that is an indication of how the principle should be left as a matter for the building societies. We are discussing legislation and we have an opportunity to firm up the principle set by those in the business—building societies, the Building Societies Association—and Members of Parliament. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) has outlined the case without forcing a Division, which is commendable of both him and my hon. Friend the Member for Burnley (Mr. Pike).
We should not waste this opportunity to try to build something into the legislation that will give the assurance that we seek and underline the principle as set out by those in the business. Before we reject outright the amendments, we should look for a compromise whereby


we can underline the principle. If one were to question hon. Members who have listened to and participated in the debate, more of them would say that the Bill should include provisions to firm up the two-year rule than would reject that proposal. Therefore, the Minister should reconsider the matter to see whether a compromise can be reached that will satisfy all parties.

Mr. Peter Bottomley: I wish to pick up on one point made by my hon. Friend the Member for Bournemouth, West (Mr. Butterfill): the difference between the Halifax building society and most of the others. If the Halifax decided that it did not want to recommend conversion or use its ability to change its procedures to stop the two-year rule, there would be few businesses big enough to make a hostile bid for it. In practice, we would have to rely on the directors putting forward a proposal. That would not be the case with middle-sized and smaller societies.
It would be interesting to hear from my hon. Friend the Minister or from a future Parliament whether we need to help to protect diversity. Existing building society members should have their interests protected: there are many more building society lenders and investors than either borrowers or speculators. Can we have a diversity of financial institutions? We would not have had anything like the same level of home ownership, individual wealth accumulation or ability to move house if the mutual principle, the forefathers of the building society movement and the co-operative societies in insurance, retail and wholesaling had not existed. The question of how to protect the opportunity for diversity is important.

Mrs. Angela Knight: I am in something of a dilemma. The hon. Member for Great Grimsby (Mr. Mitchell) accused me of speaking for too long when I tried to answer everyone's points; I have now been asked to speak again, so I am not sure what to do. I found the hon. Gentleman's contribution entertaining, not least because he professed himself to be new Labour. Here we are on the first day of a different order—my right hon. Friend the Prime Minister having made his statement—and all of a sudden, Labour Back Benchers do not want to be led by their Front Benchers. I am not sure which of the two—the hon. Member for Great Grimsby, the Back Bencher, or the hon. Member for North Warwickshire (Mr. O'Brien), the Front Bencher—had something vibrate in his pocket indicating a message from Mandelson Towers, but there is clearly a big difference opening up between them.
The hon. Member for Christchurch (Mrs. Maddock) asked me about the views of the Building Societies Association. I can assure her that I have had many negotiations, not just with the Building Societies Association, but with individual building societies. It is obviously important that their views are known on this subject and on a wide variety of other matters relating to the Bill. The Bill exists because the mutual sector wanted it, not because the Government have decided to introduce it.

Mrs. Maddock: The Minister told us of the practical details. Did the building societies agree with the Minister?

Mrs. Knight: If the hon. Lady would hold her horses, I was coming to that point. The latest communication from the Building Societies Association states that
the Association's overriding priority is for the Bill to be enacted as soon as possible The Association is more than content for the Bill to go forward unamended (other than in respect of amendments making technical and drafting corrections)"—
the three amendments to clause 10. Describing amendments Nos. 1 and 2 to clause 2, the association states:
These amendments appear to be defective.
That probably gives at least half the answer. The other half of the answer is that building societies are in two minds over the issue because they believe that changing the two-year rule could be beneficial, but they also accept that there would be a problem if it were changed because they recognise that their sector is a moving one. They recognise that the future is not likely to be the same as the past, which is true of every part of life. They recognise that there would be significant difficulties should such a change be made.
There is therefore no easy answer to this question. If we make changes—either exactly as set out in the amendments or in the spirit of the amendments—a future conversion by or takeover of a society where that society was willing for those events to take place could lead to several million people finding themselves unable to receive anything as a consequence of those events. We can easily imagine the huge problems that would arise from that.
A further aspect is that it must be for societies to choose their future, as it is for any other industry or financial institution. It is not for Government to dictate; it is for Government to enable societies to make the future that they want for themselves. The thrust behind the legislation is to move from the existing prescriptive legal framework to one that is permissive—not to dictate, but to enable societies to achieve the future they want.
5 pm
My hon. Friend the Member for Eltham (Mr. Bottomley) mentioned the Halifax procedures. He is correct in saying that, in its conversion, the Halifax has taken longer than any of the other converting societies, not least because it has undertaken two takeovers en route. The result is that no one in the position that we have just discussed will find themselves disadvantaged because they are short-time members. The question behind his comments was that the Halifax is a big society, but what happens to smaller societies? A big society, like any big company, can weather storms and, indeed, changes rather better than smaller organisations. My answer is that, in mutual societies, the only people who can put a proposal to members are the board. Therefore, unlike companies with other structures, mutual societies have the ability of the board to make decisions on what is or is not put to members.
Although I have not mentioned specifically the points made by the hon. Member for Normanton (Mr. O'Brien), I believe that I have answered them and the other points raised. I repeat that it would cause more problems to the future of the movement to make the changes proposed in the amendments or to make changes in accordance with the sentiments behind the amendments than to leave the arrangements as they stand.

Mr. Pike: I thank the Minister for her comments at the start of her first speech in the debate. I welcome her


indication that she is hopeful about the outcome of negotiations to enable the Bill to make progress. I am not quite as confident as she is—that does not mean that I disbelieve what she says, but she is more optimistic than I am. Both she and I and all those who support the concept of mutuality will be disappointed if the Bill fails to go through. However, I hope that she is right and I am wrong and that the Bill completes all its stages before the end of the week.
I should have declared an interest in that I am a member of the Halifax. I shall receive the smallest amount possible, both as a shareholder and as a borrower. I did not, however, choose to be a member of the Halifax—I was a member of the Leeds, but was forced to become a member of the Halifax as a result of the takeover.

Mr. Austin Mitchell: A detainee.

Mr. Pike: Exactly. We choose which institution to be customers of, but sometimes choices are made for us that we would not make ourselves.
The Minister was correct in saying that the reason why the Halifax has taken longer to convert than other societies is the takeovers, especially that of the Leeds. It was first announced in November 1994—which is therefore the first of the three qualifying dates to be a borrower or an investor—and the first stage was the takeover of the Leeds. That was followed by the massive task of marrying the two sets of records; there were overlapping memberships and several other problems to be ironed out before the records were in a fit state to enable the society to proceed to the next stage of the conversion process. That is why the two-year rule would not have had an effect in that instance.
The Minister seems to be in an optimistic mood—I do not know why, because the Conservatives will do badly in the general election. She was also optimistic in respect of predator bids. An example of that—

Mrs. Angela Knight: rose—

Mr. Pike: I will give way in a moment.
An example of that was the takeover by the Abbey National of the National and Provincial.

Mrs. Knight: I was only going to say that I am optimistic because we have got the Bill this far.

Mr. Pike: I accept that.
The National and Provincial had stated its commitment to mutuality and had gone through an elaborate exercise of sending to all its members literature emphasising that commitment. The literature outlined how a member who received one thing from the society could go for another and described bonuses and other bits and pieces. The society put in a great deal of work on the promotion and publicised it widely.
Suddenly, out of the blue, the Abbey National announced publicly that it was making a bid for the National and Provincial. The National and Provincial rejected that bid and after a meeting invited other bids, but, ultimately, the Abbey National took it over. All that happened relatively speedily. There was certainly a considerable change of heart on the part of the directors—they had been solidly committed to the concept of

mutuality, but they quickly changed their minds. Similarly, no one would have believed a few years ago that the Halifax would convert. This point is also the subject of later amendments. Directors' views can change and a predator can take over an unwilling society simply by convincing the board. They are the people who decide whether to present proposals to the membership who, in turn, vote on them.
I was slightly disappointed with the Minister's remarks about the principle behind the amendments, although I accept her arguments about the technical nature of the provision. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) and I looked at the Bill and tabled an amendment that allowed the issue to be debated because it needed to be debated. We hoped that either the Government or Labour Front Benchers would table an amendment that did the job more effectively and so might be acceptable for inclusion in the Bill, but that was not to be. I accept the Minister's opinion that the amendments are defective, that in some ways they go beyond what we intended and that they are open to misinterpretation.
Nevertheless, the Minister spent some time addressing the principle of the amendments and I was disappointed by her arguments because they did not really hang together. She said that many people would protest about the change, but each society that has converted has used different rules and regulations. Although people have complained about the disabled or second-named people who have not qualified, no one has written to me saying that it is wrong that the Northern Rock paid a single sum to all its members, as did the Alliance and Leicester, but that the Woolwich and the Halifax are handing out varying amounts. I do know that members of each of those societies felt strongly that things were done in the wrong way. People will always feel aggrieved if some rule goes against them or if they think that they would have done better under another rule—that is only human nature. I for one would have done better if the Halifax had offered a flat rate sum instead of a sliding scale: as it is, I shall receive only the minimum.
I agree with my hon. Friends the Members for Great Grimsby and for Crewe and Nantwich (Mrs. Dunwoody) that these issues should be debated. Even at this stage I hope that some thought will be given to the principle behind the amendments. All hon. Members, apart from the Minister, who have spoken in the debate have clearly believed that a two-year rule would be fairer. As the hon. Member for Bournemouth, West (Mr. Butterfill) said, people joining a society would know that, if they did not have two years of membership and conversion suddenly came up, they would not qualify. They would therefore join in the full knowledge of their situation.
I hope that Ministers and my Front-Bench colleagues will get together and find a way of recognising the view of the overwhelming majority. These amendments may not be the best way of doing that, so let us find another way that offers the necessary protection and stops the carpetbaggers and speculators. They should not be able to join the gravy train and get their hand-outs.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clauses 3 to 9 ordered to stand part of the Bill.

Clause 10

RESTRICTIONS ON CERTAIN TRANSACTIONS

Amendments made: No. 6, in page 16, line 14, after '(2)', insert 'or (3)'.

No. 7, in page 16, line 19, after '(2)', insert 'or (3)'.

No. 8, in page 17, line 11, after '(2)', insert or (3)'.—[Mrs. Angela Knight.]

Clause 10, as amended, ordered to stand part of the Bill.

Clauses 11 to 26 ordered to stand part of the Bill.

Clause 27

ELECTION OF DIRECTORS: GENERAL

Question proposed, That the clause stand part of the Bill.

Mr. Austin Mitchell: Although my amendment to the clause—amendment No. 3—has not been selected, I believe that the clause could still be strengthened by modification. The problem is that directors are being appointed to mutual building societies even though their interests go rather wider than the building society movement. Furthermore, they do not always come from the areas in which the societies are rooted. In effect, building societies are being white-anted by these people.
With the Halifax, more and more impossibly dignified and important people, mainly from London and the financial sector of the economy, have been appointed directors. These people do not have the interests of mutuality or of the building society at heart; they are much more concerned with the wider financial markets. It would therefore be better to include in the clause—it sets out the qualifications and election procedures for directors—some way of securing these people's testimony to their devotion to the principle of mutuality and to the building society of which they are being appointed director.
The clause deals purely with the mechanics, whereas our concern is with the principle of mutuality. Thus while defining those mechanics it would have been useful to take the opportunity to require directors to show their commitment to that principle—indeed to show that they are as committed to it as those who make up the society and those who have kept it going.
I have no desire to stand in the way of the clause, but I thought that the issue should be aired before we proceed.

Mrs. Angela Knight: I rather agree with the hon. Gentleman that directors should be prepared to stand up for mutuality. After all, they will be directors of a mutual society so they need to be committed to the concept. But what concerns me about the hon. Gentleman's sentiments is that if the Bill states that someone standing for director has to commit himself to mutuality, how will we know that that is true? Surely the best way to ensure someone's commitment to mutuality is for him or her to choose of their own volition to state that mutuality is a concept that they believe to be correct. That should be included in the statement that they put to members asking them to vote. If someone does not include that in the statement being

sent out to members, I suspect that those members will draw their own conclusions. That is why I propose to leave matters as they stand.

Question put and agreed to.

Clause 27 ordered to stand part of the Bill.

Clauses 28 to 40 ordered to stand part of the Bill.

Clause 41

PROTECTIVE PROVISIONS FOR SPECIALLY FORMED SUCCESSORS

Mr. Butterfill: I beg to move amendment No. 4, in page 58, line 5, leave out paragraph (a) and insert—
'(a) the company or a subsidiary undertaking of the company acquires the whole or substantially the whole, of the business of a mutual financial institution;'.

The First Deputy Chairman: With this, it will be convenient to discuss amendment No. 5, in page 59, line 5, at end insert—
'"mutual financial institution" means a financial institution—
(a) the objects of which do not include the making of profit for any persons other than the members of the institution (however described) on whose behalf the funds of the institution are held or invested; and
(b) as respects which, on the institution being wound up or otherwise ceasing to exist, any surplus assets, after providing for all liabilities and the costs of liquidation, must be distributed among such members:'.

Mr. Butterfill: The amendments deal with the principle of what is known as the five-year rule, imposed by the Building Societies Act 1986 to afford some measure of protection to converting societies.
Before 1986, the activities in which building societies could engage were severely limited. The 1986 Act was the first realistic attempt by the House to allow societies to engage in a greater number of activities. It was envisaged by that Act that, for some societies, the desire to offer an ever greater range of services might ultimately lead to their deciding to demutualise and become banks.
It was also recognised by the 1986 Act, however, that although a greater range of activities would be permitted under the Act, their number was still severely restricted. So it would not be possible for converting societies to have knowledge and experience of all the activities that banks could undertake. It was therefore felt that converting societies might be more vulnerable to predatory takeovers by the big banks, which might want to prevent competition by taking over the societies immediately they had converted. It was felt by Members on both sides of the House, therefore, that some protection should be given for a period of five years.
I suggest that, although certain things have changed since 1986—the world has moved on and many societies have become much more sophisticated, engaging in a wider range of activities than hitherto—the position has not changed completely. Societies still cannot engage in very many activities, and even under the Bill some activities will continue to be prohibited to those who call themselves building societies. It is appropriate, therefore, that some transitional protection remains.
It has been suggested that it would be wrong for converting societies to be protected yet be able to be predators. I have some sympathy with that view because


we should retain diversity of lending. If we are not careful, mortgage lending in the United Kingdom may be dominated by a handful of major institutions—predominantly banks. That is a grave danger, because it would restrain competition and choice for the consumer and, ultimately, act against the national interest and the interests of depositors and borrowers. I am anxious, therefore, that we have as diverse a range of lending organisations as possible.
There should be three types of lending and deposit-taking institutions. The first tranche would consist of the big banks, which are very large, are established and are secure in their present activities. The second tranche would consist of several converted societies, competing with the banks. Few hon. Members would disagree that some banks need fresh competition, because for a long time they have had things far too much their own way. A little healthy competition would not go amiss and would improve their service. The converted societies would compete with the banks in their range of activities but retain some of the essential elements of service to the community that they had initially as mutual societies.
A third tranche would consist of the remaining mutual societies that it would be in the public interest to retain to a large extent. That is the purpose of the amendments tabled in my name and those of the hon. Member for Normanton (Mr. O'Brien) and others. There is widespread agreement in the Committee, at least on the Back Benches, that transitional protection is required for converting societies.
I accept that it would be wrong if the converting societies were enabled to be untrammelled predators on the mutual building societies. Indeed, my amendments seek to protect not only mutual building societies but all mutual institutions.
Mutuality is a very important concept. It is an almost uniquely British one. It is extremely valuable, and the Committee would be foolish if it were to enact legislation that would diminish it. I therefore propose effective protection for friendly societies and mutual insurance companies. All mutual financial institutions would be protected because, if a converting society bid for a mutual, it would lose the protection that it enjoyed under the five-year rule.
I know that the banks would say, "That is unfair because converting societies can bid and they receive some protection from predation, but we don't." I am not sure that I agree that the banks need such protection. They are big, grown-up boys and have been playing the game for a long time. They do not need the protection that the converting societies need and deserve.
Banks will say that converting societies could do all sorts of other things without losing protection. They could buy mortgage books—I am sure that many of the large banks would like to get rid of some of their duff mortgage books, following unwise lending—or chains of estate agents. All sorts of financial institutions were unwise in their acquisition of chains of estate agents and would dearly like to unload them on some of the converting societies. With respect, however, we want not that type of competition but competition in the key areas of banking and customer service, which the converting societies will seek to offer. Therefore I put it to my hon. Friend the Economic Secretary that there is a case for retaining a much greater measure of protection than she proposes under the Bill.
My hon. Friend the Economic Secretary says that we are giving those societies protection; in fact, we are giving them nothing. The Bill removes the protection that they enjoy under the 1986 Act without giving any reasons for doing so, other than the fact that times have changed. No other reason is given for the draconian removal of almost all the protection that the House—members of the Conservative party and of the Opposition—considered appropriate in 1986.
I ask my hon. Friend the Economic Secretary to think again because it would be tragic if, in pursuing such a course, we diminished the number of organisations that offer a service to the public.

Mr. Pike: Is not one of the best examples of the workings of competition in the financial sector the fact that the banks have extended their hours as a result of competition from building societies? Almost certainly, banks would still open from 10 o'clock to 3 o'clock and not open on Saturdays, were it not for their fear of competition from building societies.

Mr. Butterfill: As he so often does, the hon. Member for Burnley (Mr. Pike) has hit the nail on the head: only by encouraging such competition have we achieved as great an improvement in service as we have in recent years. I want that improvement to go much further. The big banks have great influence on Treasury officials; they have had a semi-incestuous relationship for decades. The big banks should not get their way on this matter; the Committee should ensure that true competition is retained.
I understand that it has been suggested in certain quarters that my amendments are defective—that they do not precisely achieve the object that I seek. If that is true, I should be very happy if, by agreement between the two Front-Bench teams, they were amended slightly, perhaps in another place, and brought back for notional approval in this place. However, I believe that what I suggest is desirable and is in the interests of the building society movement, the converting societies and society in general, so I hope that I shall receive a favourable response from my hon. Friend the Economic Secretary.

Mr. William O'Brien: Clause 41 is entitled "Protective provisions for specially formed successors." The spirit of the amendments is to offer some protection for the successors of takeovers and mergers of mutual societies. During public consultation on the Bill, the five-year protection period was one of the most important subjects of debate. People who were involved in the consultation envisaged that there might be problems if the Bill did not afford protection.
Under the provisions of the Building Societies Act 1986, societies that convert to banks are protected from external takeover for five years after conversion. That protection was designed to protect those that converted from takeovers during the early years in what people in the business refer to as the stock exchange jungle. The organisations that converted to plc status had that protection. In an increasingly competitive environment, that protection gives a converting society a significant advantage.
During the Bill's consultation period, a strong body of opinion emerged that organisations that wanted the advantages of a stock market listing should also accept


the disadvantages, such as the threat of a takeover. It is unacceptable to the continuing mutual societies that a plc bank that was once a building society should be able to mount hostile bids for other institutions—including mutual societies—and yet remain immune from takeover for five years. One can readily see that there is an imbalance: an organisation that converts to plc status is protected but the 70 mutual societies that remain are not.
The amendments would offer some protection not just to building societies but to mutual societies, and would apply to all mutual organisations. The Government accepted that point. The protection will be removed if a converting building society acquires another financial institution during the five-year period. That is the significant point of the amendments, and they would protect existing mutual building societies.
As the hon. Member for Bournemouth, West (Mr. Butterfill) pointed out, there may be anomalies in the drafting of the amendments, but the principle and spirit behind them are correct. I appeal to the Minister and other hon. Members to support them, because they would correct an existing imbalance. There is nothing wrong with the amendments; they are constructive and are designed to add strength to the Bill. I hope that the Minister will appreciate the sincerity and spirit behind the amendments and accept them.

Mrs. Maddock: Most hon. Members will agree with the spirit of the amendments. Many of us recognise that, since the 1986 Act, things have changed and that the societies that converted had a significant advantage over others. That was a key fact during consultation on the Bill. We all agree that organisations that wanted the advantages of a stock market listing should have to take on board other responsibilities as well. We have had most discussion about that requirement—so much so that the Halifax building society has accepted that argument and given up its protection. However, I am advised that the amendments, as drafted, may not do what we would all like them to do.
I think that every hon. Member in the Chamber nodded in agreement with the spirit of the amendments, but I hope that the Minister will look carefully to see whether there is any way in which she can deal with the problem of unfairness. Although I am with her in spirit in trying to get the Bill through, I pointed out on Second Reading that there would be a problem if we had to consider the Bill in Committee on the Floor of the House and then, without any time in between, had to complete its final stages. I hope that we can reach agreement on how we can deal with this despite the pressure that we are all under to try to ensure that mutual building societies get a fairer deal in the financial world.

Mr. French: I should like to take this opportunity to declare an interest, in that I have accounts with several building societies.
I suspect that I may be in a minority in fundamentally disagreeing with the proposition of my hon. Friend the Member for Bournemouth, West (Mr. Butterfill). One always feels a little uncomfortable disagreeing with my hon. Friend, because he is normally so sensible, but on this occasion I have great difficulty in accepting the arguments that he put before the Committee.
Under clause 41 as drafted, a society that converted to a bank would lose its immunity from takeover if it sought to take over any other financial institution. Under my hon. Friend's amendment, as I understand it, the loss of immunity would be triggered only if the takeover was of a mutual institution, thereby leaving the new bank—the newly converted society—able to take over any other type of organisation without triggering the loss of its immunity.
As I made clear on Second Reading, I am very doubtful about the general principle of protection, because it would create two classes of public limited company: those that enjoyed protection because of the route that they followed—as a building society converting to a bank—and those that did not have the immunity, and could not because they had been a bank or some other institution for a considerable time. Therefore, a seriously uneven playing field would be created: between the newly converted society and the other banks with which it was competing, and also between the new bank that was formerly a society and the society that had not converted. We should not seek to enshrine that unevenness in legislation.

Mr. Butterfill: Does my hon. Friend accept that there is already an unevenness? The converting societies have been restrained from engaging in a range of activities for the whole of their existence, whereas the organisations for which they may be bidding have not been subject to those constraints. Converting societies start off uneven. The purpose of the transitional relief is to give them a period within which they can come up to speed and be on equal terms with those that are already plcs and engaged in those activities.

Mr. French: I do not agree with that argument. My hon. Friend is looking at the matter from the perspective of the 1986 Act. He is not taking into account the new powers that the Bill confers on the building societies. In the course of time, the building societies will have been able to avail themselves of the additional powers that the Bill provides. Having done that, they will not be at a disadvantage compared with organisations that have been operating under the Banking Act 1987 for a long time. They will have operated under the new building societies legislation that we are discussing. That will give them the greater powers that they require and, having had those powers for as long as they consider necessary, they will be able to make the decision to convert.

Mr. Butterfill: I thank my hon. Friend for giving way again. I am sure that he has read the Bill. Under part I, there will still be considerable constraints on the activities in which the converting societies can engage.

Mr. French: I do not accept that, either. The restrictions that the Bill still places on building societies relate to activity which it would be best that they did not engage in. I do not believe that there is a popular view, for example, that building societies should engage in the derivatives market, which is known to be extremely risky. If the Bill provides, as it does, that in future building societies should still stay out of the derivatives market, it is showing sound judgment. That is what ought to happen.
I do not accept the thrust of my hon. Friend's arguments. I believe that a society that decides to convert and to become a bank should do so in the full knowledge that it is moving from the context of the building societies


legislation into the context of the Banking Act 1987. Before it takes that fundamental step, it must be sure that it can manage in the new world in which it proposes to operate. If it considers that it cannot do that or if, as my hon. Friend would say, it considers that it has not had long enough to gain experience of indulging in the other activities that the 1987 Act permits, it has not yet reached the stage where it should be taking that decision.
If ever protection were afforded to mutual status, and the advantages and benefits of mutual status were recognised, that argument brings home the fact that such status should not be lightly abandoned.
My hon. Friend said that it had not been possible for societies to develop the range of activities that they believe they will need in order to be on an equal footing with banks. For that reason, I emphasise again that the Bill will give them the opportunity to develop their expertise in the areas from which they have up to now been excluded. Having developed that expertise, in a few years they will be able to convert to banks if they so choose, and there will be no need for any artificial protection such as that in the Bill or especially that in my hon. Friend's amendment.

Mr. Butterfill: My hon. Friend is extremely generous in giving way once more. Can he name a bank that would be subject to the constraints imposed by clause 4, under which it would have to keep 75 per cent. of its total assets secured in loans on residential property? That is what the societies are required to do under the Bill. It is nonsense to suggest that a bank that had experience in loans in a range of commercial activities would be constrained in that way.

Mr. French: If the society is of the view that the requirement to maintain 75 per cent. of its assets in mortgage lending is unduly inhibiting on its activities, it will have another reason for converting, if it wishes to do so. It is for the society to decide whether that is a condition under which it can operate, in which case it should remain a building society, or whether the condition is unduly onerous, in which case it can break free from the building societies legislation and operate under the Banking Act 1987.
I do not see why, in the course of the building society making that transition, special provisions should be made to compensate for what in other respects might be regarded as an unsound judgment on its part. Building societies must decide under which legislation they wish to operate.
I see no justification for special transitional arrangements, for the further reason that the potential loss of immunity from takeover is a matter over which the societies have control. The provisions of the Bill do not stop one of the newly converting societies going on the takeover trail. It may still do so. Building societies are in no way inhibited from expanding their position by acquisition if they want to do it that way. They would do it in the full knowledge that if they chose to take that route, they would trigger the loss of the immunity. The decision is entirely theirs to live with the consequences of their action. That is why I do not believe that transitional arrangements are necessary. The decision is part of an overall judgment as to whether plc status suits a business. If plc status does not suit it, it should not leave the legislative framework applicable to building societies.
I have the greatest difficulty in understanding the argument of the hon. Member for Normanton (Mr. O'Brien), who tried to argue that the amendment provided protection for existing mutuals. Exactly the opposite is the case. It does not provide protection for existing mutuals at all. If the hon. Gentleman contributes again to the debate, perhaps he will explain his views.
There seem to be some drafting defects in the amendments, which the Building Societies Association has clearly identified, particularly in relation to the question of when a mutual financial institution encompasses a company and when it does not. Even if one embraced the principle, which I hope the Committee will not, the amendments would have to be redrafted.

Mr. Mike O'Brien: I have listened with interest to the views of the hon. Member for Bournemouth, West (Mr. Butterfill) and of my hon. Friend the Member for Normanton (Mr. O'Brien) about the five-year rule.
I have a great deal of sympathy with building societies such as the Alliance and Leicester and the Woolwich, which undertook conversion in the expectation of a five-year protection. Ten months after the Alliance and Leicester had made public its intention to convert, the Government suddenly announced in November for the first time that there would be a significant change to the five-year rule as a result of the consultation that had taken place. Naturally, the converting building societies were surprised and angry at that announcement, and I fully understand their surprise and anger. The question is whether the wording of the clause is an appropriate response.
The hon. Member for Bournemouth, West acknowledged that there might be technical problems with the amendment. I shall return to that, but let me say a word about the principle. Converted building societies want some protection to take over others in order to reach a critical mass during the five-year period, so that they will be less susceptible to takeover at the end of it. That is what the clause is about.
The hon. Gentleman advanced a sensible argument in support of his amendment. He argued that there is a public interest in maintaining a degree of diversity and choice in our financial institutions. He said that we would not want to see a mutual building society sector and a big banking sector, with very little in between, because building societies that had reached the end of their five-year protection period or had launched a takeover during that period and lost their protection had been the victims of takeovers.
There is an argument for retaining a degree of diversity and choice in the market, and for ensuring that some institutions, which are not big banks or mutual societies, are able to perform the same functions. I am not entirely sure that this is the right way to protect that area of the market. The Minister said—and we agree—that the Government should be neutral regarding whether conversion takes place in a particular building society. However, unamended, does not clause 41 impose an obstacle to conversion? Any converted building society will either already be at critical mass or seek to achieve that critical mass, to enable it to survive at the end of the five-year protection period. Many smaller unconverted societies know that, if they were to convert but failed to reach critical mass within five years, they would probably be taken over.
Clause 41 says, in effect, that building societies cannot convert and seek to achieve critical mass. Would not building societies that are contemplating converting look at that clause and cease to consider it, because it is unlikely that they would be able to survive a takeover after the cessation of the five-year protected period? Do the Government intend that clause 41 should deter mutuals from converting? That does not square with the Minister's comments. Perhaps she could clarify precisely how the clause would operate.

Mr. Butterfill: Does the hon. Gentleman accept that it is a question not just of critical mass—as I tried to explain to my hon. Friend the Member for Gloucester (Mr. French)—but of the nature of the loan book? A converting society will, of necessity—even after the Bill is passed—have a loan book comprising 75 per cent. loans secured on residential property. A high street bank has an entirely different loan book. Institutions require some transitional protection when changing from the loan books that they had as societies to the loan books that they will need as banks.

Mr. O'Brien: I do not deny that the hon. Gentleman makes a strong argument, and I shall be interested to hear the Minister respond to it. However, I am not convinced that the amendment will deal with that issue in a technical manner. Does he accept that there are technical deficiencies in the amendment, as worded?

Mr. Butterfill: I am advised of that.

Mr. O'Brien: In that case, I shall not outline those deficiencies. I certainly cannot support the amendment, as worded. I do not think that it achieves the hon. Gentleman's objectives, and it poses a number of potential threats to mutual societies which I am sure he does not intend.
However, I believe that there is something to be said for the broad principle that the amendment embodies. I shall be interested to hear the Minister respond to that point, and to whether the operation of clause 41, unamended, would discourage building societies from converting.

Mrs. Angela Knight: Contributions to the debate have highlighted the differences of opinion on this subject. My hon. Friend the Member for Bournemouth, West (Mr. Butterfill), who moved the amendment, believes that protection for converted building societies is a key issue. I think that the hon. Member for Normanton (Mr. O'Brien) was somewhat confused in his remarks. The amendments do nothing for mutual societies: they are about the degree of protection that a converted society may have. The hon. Member for Christchurch (Mrs. Maddock) sought more information, and my hon. Friend the Member for Gloucester (Mr. French) agreed with me about the matter.
At issue is the amount of protection that a converted society has, or needs, once it becomes a new bank. The consultation process produced the universal view that no protection should be necessary. In fact, we have chosen the middle course: if a converted building society requires

time to stabilise once it becomes a new bank and needs to make the sort of changes to which my hon. Friend the Member for Bournemouth, West referred regarding 75 per cent. of its lending being on residential property, it has five protected years in which to do so. It loses that protection only if it goes on the acquisition trail.
Both banks and insurers—not just the mutual building society sector or the mutual sector—have expressed concern to us that such protection should not exist. My hon. Friend is a well-known business man who has operated in various fields. If, as a business man, his company was the subject of a hostile takeover bid and he was unable to defend it because the predator company had protection, I think that he would be justifiably angry. Parliament should not confer unfair protection on a particular sector of the financial services industry. It is true that widespread concern has been expressed, and that we have given the converters a concession in another way by allowing the removal of what is known as the priority liquidation distribution rights, which has benefited them to the tune of tens of millions of pounds. We have taken with one hand, and given with the other.
I should like to dispel three illusions that were created in the debate. The first is that converting societies are small institutions. They are not. The Woolwich and the Alliance and Leicester are of comparable size to the Royal Bank of Scotland and rather larger than that well-known insurer, the Guardian Royal Exchange. They are substantial organisations operating in a vibrant, thriving financial market.
Secondly, my hon. Friend the Member for Bournemouth, West and others said that converted building societies would not wish to acquire mortgage books and so forth. Yet that is precisely what has occurred. Some of the societies that are remaining mutual are making acquisitions in order to expand their activities as mutual societies.
My final point relates to the comments of the hon. Member for North Warwickshire (Mr. O'Brien), who said that he has some sympathy with concerns expressed in this area because I suddenly announced the Government's intention to change the five-year rule. Consultation in this area has been going on for some time, and organisations such as the Building Societies Association were concerned that protection should remain. I am informed that the Alliance and Leicester, which has raised hon. Members' awareness in this area, was represented at a meeting of the BSA council in June, when the association's response to our consultation was discussed and finalised. That response called for the removal of five-year protection. We are not talking about something new that represents a sudden change. Instead, we are talking about ensuring fairness in the mutual sector and in the banking sector, be it the new banks, the insurers or the traditional banks. On that basis, I ask the Committee to reject the amendments.

6 pm

Mr. Butterfill: I am extremely disappointed by my hon. Friend's response. She said that there would be complaints if we were to give protection, which tells me that she is missing the fundamental point. The bodies concerned have the protection now, and have enjoyed it since 1986. To my knowledge, there have been no complaints of abuse by them of that protection or abuse


by any of the societies that have already converted. My hon. Friend is raising a false hare when she speaks of abuse. The system has existed since 1986 and it has not been abused.
We are seeking to give transitional protection and no more. My hon. Friend suggests that the hon. Member for Normanton (Mr. O'Brien) is confused, but it would seem that the confusion lies with my hon. Friend. It is inevitable that converting societies that are anxious to change their businesses rapidly will go on the acquisition trail. If the amendments are accepted, they will not go on that trail for mutual building societies, friendly societies or mutual insurance companies. They will confine their activities to businesses that will not lead them to the risk of losing the limited protection that is proposed.
I am sorry that my hon. Friend the Minister does not accept the amendment. Those in another place may take a different view. In the meantime, as I accept that there may be drafting defects, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 41 agreed to.

Clauses 42 to 47 agreed to.

New clause 1

CONDITIONS FOR TRANSFER OF A SOCIETY'S BUSINESS

'.—After subsection (4) of section 97 of the 1986 Act (transfer of business to commercial company) there shall be inserted the following subsection—
(4A) The Commission shall not confirm the transfer and its terms unless it is satisfied—

(a) that a period of not less than six months has elapsed between the date of the first notification to the members of the society of the proposal for the transfer and the date when the members of the society were required to vote on the transfer resolutions; and
(b) that the directors of the society provided reasonable facilities for communicating to the members of the society any statement of reasons, submitted in writing by a member of the society, for opposing the transfer resolutions.".'.—[Mr. Austin Mitchell]

Brought up, and read the First time.

Mr. Austin Mitchell: I beg to move, That the clause be read a Second time.

The Chairman of Ways and Means (Mr. Michael Morris): With this, it will be convenient to discuss the following: new clause 2—Demutualisation: proceeds for charitable purposes—
'—After subsection (4) of section 97 of the 1986 Act (transfer of business to commercial company) there shall be inserted the following subsection:
"(4A) The Commission shall not confirm the transfer and its terms unless the terms include provision for the application of not less than 15 per cent. of the realised capital value of the society to charitable purposes appropriate to the society's existing business and geographical location.".'.
Amendment No. 9, in schedule 5, schedule 5, page 70, line 42, at end insert—
'5CC. It shall be the duty of a building society receiving a transfer proposal to appoint independent financial advisers representative of the interests of the members of the society, to obtain from those

advisers an assessment of the capital value of the society, and to communicate that assessment promptly to the members of the society.'.

Mr. Mitchell: Given the heavy, serious and prolonged consideration that we are giving to such an important Bill, it is a pleasure to introduce the new clause. I do so while making the usual protest about the pressures that have been put on us to speed the Bill through its parliamentary passage. These pressures are effectively turning the House of Commons from the Mother of Parliaments into an abortion clinic. We are being asked, potentially, to kill infant Bills so that the mother Bill may live.
Another pressure is being brought to bear on the Committee. The Whips are saying, "Keep it short because we want to get the business statement." Younger Members such as myself have hopes of high office in the incoming Administration, and against that background it is important that Members's names are being taken. I shall, of course, comply with this pressure. At the same time, I congratulate the Minister. I hope that she gets her Bill. She has shown great perseverance, effort and charm in plucking this brand from the Prime Minister's funeral pyre. That is effectively what the hon. Lady is doing. Given the haste with which the Bill is proceeding through Parliament I have only to say, "Sister, this Bill had better be good", as we say in the new Labour party.

The Chairman: Order. The hon. Gentleman is supposed to be speaking to new clause 1.

Mr. Mitchell: I am the chair, brother.
New clause 1 is before us, Mr. Morris, and we know what is happening. We must accept that the Bill is word perfect in a way that no other Bill has been. That reflects the pressure that is upon us.
The new clause represents an attempt to introduce a greater check on the process of demutualisation. I am speaking of the transfer of mutual societies into other businesses, such as public limited companies. The process has been overhyped, with the result that the mutual principle has been grievously wounded. That is a principle that we must keep alive. It is important that we have variety and pluralism. Mutuality should be maintained as a system of corporate government because it holds out great benefits. It brings important services to both borrowers and lenders, such as better rates of interest to those who lend money to a society. The advantages of demutualisation, as I have said, have been overhyped by an organisation that was desperate to take that course.
Shareholders have been asked to believe that the money that they have been given in the form of bonus shares comes from nowhere. That is not so. The money comes from the capitalisation of the efforts and investments of previous generations. Shareholders are being asked to believe that demutualisation will revitalise the society but it will not. Instead, it will enable the society to continue in much the same fashion.
There has been no sudden or dramatic change in any of the societies that have been demutualised. Instead, they have spread into new services and new areas of business, which means meeting new risks. New status equals new risk. That could be the basis of an advertising slogan throughout the country. The process is taking societies away from their core business, which they know well,


and encouraging delusions of grandeur, which are easily encouraged in building societies on the part of top brass, including directors.
Effectively, the shareholders have been conned. The real dynamic is the desire of the top brass, including the directors, to enrich themselves by increasing their salaries and returns within the new companies. To do that, they are putting over a story that is enormously exaggerated and distorted.
It is a story that can fool the shareholders. At the Halifax conversion meeting, the light of greed was glittering in shareholders' eyes. They were being given £1,000—in some cases more—for nothing. It seemed that the money was being plucked from the air. I seek a breathing space through the new clause so that the alternative view might be put more effectively.
In some respects, new clause 2, tabled by my hon. Friend the Member for Birkenhead (Mr. Field), is even better than new clause 1. My hon. Friend asks that there be actuarial advice on financial gains and losses, and in this instance it is easy to deceive shareholders.
When the Halifax conversion took place I received great wodges of documents and financial statements from the society advancing the case for demutualisation. The process was presented as the opening of a glittering future. There was little to represent the alternative argument. There was no opportunity to provide a costed and calculated reply underlining the disadvantages of demutualisation while at the same time stressing the strengths of mutuality. It was not possible to present that argument to the shareholders with the same power and effectiveness as was enabled by illustrated lectures and overhead projection to support the case of demutualisation. The alternative argument should be advanced on an alternative footing.
Investors are being conned by glittering financial prospects in a series of unsubstantiated claims and statements by the top brass in building societies, including directors—those who will be the principal beneficiaries from the process of demutualisation. We should be suspicious. Even better, information should be provided to support the other side of the argument. Let us impose a delay so that we ensure that financial calculations are properly undertaken. I do not want the mutual principle to be weakened and cut any further by the Gadarene rush of investors in large building societies such as the Halifax. That process of weakening and undermining encourages others to go the same way and get the same rewards.
My hon. Friend the Member for North Warwickshire (Mr. O'Brien) will not want to reply at length to this debate. I hope, however, that he will use a tactic different from the one he used earlier. I hope that my hon. Friend will sit and growl, and look as though he supports the new clause, gives it his good will and thinks that it is damned good—it is a damned good new clause. If he does that, we may frighten the Minister into giving us a concession.
The Minister may then say, "It is a bit late to introduce the proposal in a new clause and it is not as well worded as it would have been if the Government's draftsmen had written it, but I shall see whether we can use regulation to approach the same point and to make the process of demutualisation more difficult." If my hon. Friend the

Member for North Warwickshire growls a bit, we may be able to frighten the Minister into that concession. I hope that my hon. Friend will do that.

Mr. Frank Field: As I am older than my hon. Friend the Member for Great Grimsby (Mr. Mitchell) and do not have his aspirations, I will take a few moments to explain new clause 2 and amendment No. 9.
It was not so long ago that a right hon. Member was reported to have said that there was no such thing as society. If one reads carefully the article in which the then Prime Minister was quoted, one discovers that she said that there was no such thing as society unless there were strong families. I suggest that one can also have no such thing as society unless there are strong feelings of mutual aid in a community. Over the past 20 or 30 years, we have seen a ripping out of what amounts to valuable social capital.
When housing was in both the public and the private sector, one was able to speak for one's family. If someone wanted to look after his mother or father, that was a good reason for being rehoused near them. Such reasons are now ignored and other reasons have been put in their place. That helps to destroy the sense of society and community, and the operation of mutual aid.
The Bill deals with the social capital that has been built up in mutual aid societies and which is being ripped out because certain individuals wish to make a small financial gain. I refer to many individuals because, as I should have declared at the beginning, I am a member of a number of building societies. If we take the Economic Secretary's advice, we should join many more to protect their status. I am also a member of Abbey National. I see no difference in the service that that bank now offers compared with the service offered when it was a building society. What we do see is that in all the groups that demutualise, the directors get very generous share options.
It is to protect the social capital that has been built up through generations of members not demanding their pound of meat, but leaving some of it there for the benefit of future generations that I have tabled new clause 2 and amendment No. 9. In new clause 2, I suggest that if a society demutualises, it should be required to put aside 15 per cent. of the value of the company that results in a charitable trust to further the aims of the former mutual society.
Under amendment No. 9, when societies contemplated demutualising, the members would have appointed for them financial advisers to tell them whether they thought it was as good a deal as the directors said it was, given that the directors would benefit through large share options.
The Minister may make points about whether the new clause and the amendment are sound; I will defer to her on that. If we withdraw the new clause, will the Government give us an undertaking that they will seek to put the provisions on the statute book by way of a statutory instrument? I hope very much that that is possible.
All our debate today—it has been a fine debate—has reflected the idea that we do not get a community by being able to spell the word or by tabling resolutions in the House of Commons, but by working at it. As the previous Prime Minister said, if we do not have strong families, we are unlikely to have a society. Similarly, if


we do not have strong mutual aid organisations, we shall not have strong communities and strong societies. That is the spirit in which I speak to the new clause. I may have been less brief than my hon. Friend the Member for Great Grimsby, but I am older and without his ambitions.

Mr. French: The hon. Member for Birkenhead (Mr. Field) will have noticed that the Northern Rock building society, in formulating its conversion proposals, has made provision for the setting up of a charitable foundation, the purposes of which will be to meet exactly the good causes that are described in new clause 2. It is open to societies at the moment to meet the spirit of the new clause, although they are not obliged to do so.

Mr. Frank Field: Everyone in the House applauds Northern Rock. New clause 2 would put its action beyond any dispute in the courts. Much as I admire Northern Rock's proposal, I wonder whether some of its members may move against it in the courts because it has not given the membership all the money that is due. New clause 2 would ensure that Northern Rock's proposal is not only sound for it, but has to become the model of behaviour for all other societies that are converting.

Mr. French: The hon. Gentleman will also have noticed that a formula not dissimilar to his is likely to be embraced by the Alliance and Leicester building society. Of the societies currently converting, the one that stands out as refusing to meet the spirit of new clause 2 is the Halifax building society.

Mrs. Angela Knight: The hon. Member for Great Grimsby (Mr. Mitchell) is nothing if not consistent; he has made similar remarks throughout our discussion of the Bill. New clause 1 would require a delay of not less than six months between the date of the first notification of the proposed transfer to the members and the date on which they were asked to vote on it. The process takes longer than six months already. If we imposed a statutory period of delay in what is essentially a commercial, market-sensitive operation, there would be difficulties.
Members opposed to the principle of a transfer already have opportunities to make their views known. Many of those opportunities have been strengthened through the accountability package in the Bill. If the commission has evidence that material information in relation to proposals that are being put to the vote has not been given to members, it will take that into account when deciding whether to confirm the transfer.
The hon. Member for Birkenhead (Mr. Field), in amendment No. 9, would require a society that received a takeover offer, whether confidential or not, to get a valuation of the offer and to pass it to its members. That would cause immense difficulties because proposals made to a society are often confidential. Under the amendment, the society would have to publish the details of the valuation of a confidential offer. That would cause considerable instability for a society. I assure the hon. Gentleman that the regulations operated by the Building Societies Commission ensure that all details in the transfer document, which the society will ultimately give to its members, are full and correct in every respect. The issue of the valuation of an offer that is out in the open is, therefore, covered in that way.
New clause 2 would ensure that a converting society put a proportion to one side for a charity. We all congratulate Northern Rock on making that decision and I am sure that Northern Rock's members are in favour of it. If we made such a charitable option compulsory, we would be moving away from what we understand to be the necessary requirements for a charity. Although I agree with the sentiments behind the new clause and I would urge other converting societies to follow suit, I have strong reservations about making a voluntary requirement into a compulsory one.

Mr. Austin Mitchell: I was disappointed with the Minister's reply. Although it is easy to pick holes in the amendments as we do not have the support of skilled civil servants and draftsmen, I wanted the Minister to express her support for the principle involved—that of making demutualisation more difficult, slowing it down and providing information of a quality, volume and weight comparable with the deluge of that put out by the directors. I am sorry that the hon. Lady did not accept that principle. I understand that she is becoming nervous about the fate of her Bill just as I am getting nervous about my future in seven weeks' time. Because of both those paroxysms of nerves, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New clause 4

INFORMATION TO BORROWERS

'.—After section 57 of the 1986 Act there shall be inserted the following section—
.—(1) It shall be the duty of the Commission to prescribe in rules the information which must be provided by a building society to its borrowing members.
(2) In particular, and without prejudice to the generality of subsection (1) above, rules made by the Commission under that subsection shall prescribe that any notification of a change in the rate of re-payment of a mortgage loan should include notification of any consequential change in the final date of completion of the mortgage.".'.—[Mrs. Dunwoody.]

Brought up, and read the First time.

Mrs. Dunwoody: I beg to move, That the clause be read a Second time.
As the Minister has proceeded with great speed this afternoon, I am sure that she will happily accept new clause 4, which is straightforward. We have heard a great deal about tidying up the 1986 Act. I am asking only that we are fair to the innumerate.
The new clause requires:
It shall be the duty of the Commission to prescribe in rules the information which must be provided
and that
In particular, and without prejudice… rules made by the Commission under that subsection shall prescribe that any notification of a change in the rate of re-payment … should include notification of any consequential change in the final date of completion".
The issue arose because an extremely intelligent and sensible lady of my acquaintance had arranged to repay a 15-year mortgage with the final payment just before her retirement. She was considerably upset when she queried a particular rate change to discover that the term of the outstanding mortgage was two and a half years longer


than she had expected. The banking ombudsman took up her case and only then was it revealed that, because of the miscalculation by Abbey National, she had been underpaying her mortgage for more than 10 years. That would place anyone in a difficult position as it would require continuing to make repayments for a greatly extended period or doubling the repayments.
Many people would find it extremely difficult to cope with much larger repayments or an extended term. Abbey National contended that its old computer system had not alerted staff to the error. How do Abbey National customers know that the current system is working properly? Would it alert staff to a similar problem? How many others may face the same difficulty in repaying their mortgages with Abbey National or any other lending institution?
I make no apology for the fact that many borrowers are not particularly numerate. However, they are often clear about the date of the final repayment. Many of them have it engraved on their hearts. Therefore, particularly in view of the fact that all large companies will have to reprogram their computers in 2000, it would be simple to include in the information to borrowers my simple, straightforward proposals. The new clause would be of enormous use and protection to customers and it would be so simple to implement that I am sure the Government would like to do so. I am therefore very happy to give the hon. Lady the chance to accept new clause 4.

Mrs. Angela Knight: I have a great deal of sympathy for the case that the hon. Lady has made. However, there are three difficulties with new clause 4, so let me suggest another way of achieving its objective.
First, the new clause would require the commission to have a new statutory function to administer it. Clearly it does not have that statutory function. Secondly, the new clause applies only to building societies and banks also offer mortgages. Thirdly, even if an unfairness arose, the new clause provides no means of redress.
Shortly, the Council of Mortgage Lenders will be publishing its code of practice, which will cover such matters. In addition, it ties all lending institutions to the

relevant ombudsman. Therefore, should similar difficulties arise in future, I am sure that they will be covered by the code and there will be redress through the relevant ombudsman. I hope that, with that assurance, the hon. Lady will see fit to withdraw the new clause, although I respect the reason why she moved it.

Mrs. Dunwoody: I am grateful to the hon. Lady, but I should say that I tabled the new clause precisely because the banking ombudsman, having considered the case and discussed it, was unable to sort it out. I shall withdraw the amendment tonight, but I shall not forget it. I shall return to the issue again and again.
I am seriously disturbed by the inordinate speed at which the Bill has been rushed through the House. Experience tells me that any Bill, no matter what the subject, taken at such speed ends up having to be done again.

Mrs. Knight: I assure the hon. Lady that the case to which she referred was considered before the Council of Mortgage Lenders' code of practice, which has not been produced in its final form. I also assure her that I, too, will be looking carefully at these matters to ensure that unfairnesses are properly addressed in future.

Mrs. Dunwoody: I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Schedules 1 to 9 agreed to.

Bill reported, with amendments.

Order for Third Reading read.

Mrs. Angela Knight: I beg to move, That the Bill be now read the Third time.
Given the quality of debate today and on Second Reading, and given that the Bill has been published in draft form and has been the subject of extensive consultation outside the House, I believe that it would be for the convenience of the House to move its Third Reading formally.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

Business of the House

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): With permission, I should like to make a further short business statement. Following my announcement earlier today and discussions through the usual channels, the business for tomorrow will now be as follows.
TUESDAY 18 MARCH—Remaining stages of the Transfer of Crofting Estates (Scotland) Bill [Lords].
Remaining stages of the Social Security (Recovery of Benefits) Bill [Lords].
Remaining stages of the Birds (Registration Charges) Bill.
Motions on the Police and Criminal Evidence Act 1984 (Codes of Practice No. 4) Order and the Criminal Procedure and Investigations Act 1996 (Code of Practice) (No. 2) Order.
Motions on the Treasure Act 1996 Draft Code of Practice (England and Wales) and the Treasure Act 1996 Northern Ireland Draft Code of Practice.
Motions on the Legal Aid (Functions) Order and the Legal Advice and Assistance (Scope) (Amendment) Regulations.
I regret that it has not been possible, as I had hoped earlier, to announce the business for the rest of the week. Discussions between the usual channels are continuing and I shall make a further business statement tomorrow.

Mrs. Ann Taylor: I thank the Leader of the House for that information and share his regret—although I understand why—that he is not able to announce more than one day's business at the moment. Will he confirm that the other business to be completed later in the week is important and could, indeed, lead to votes in the House? Discussions are continuing and I am sure that further statements will be made shortly.
Is the Leader of the House in a position to say anything about private Member's Bills and the procedure that he suggests we adopt for them? Will he assure the House that Ministers will not in the next few days abuse their position to make statements to the House except on matters of real significance or to provide genuine accountability to the House, which has been rare in this Parliament?
In the earlier business statement, the Leader of the House very unusually forgot to answer one of my questions. Will he take this opportunity to confirm that, when the House is prorogued on Friday, it will not meet again and that the Dissolution of Parliament will be by proclamation?

Mr. Newton: I apologise to the hon. Lady for the fact that I did indeed miss one of her questions earlier. I will take it first now, and the answer is yes. I am grateful to her for acknowledging the difficulties of sorting everything out in time for this statement. I can confirm that some of the other business that we expect to take later in the week, including that currently in another place, could well lead to votes. If she is anxious to underline that, I can certainly confirm what she says. The area of private Member's Bills is one of those in which we are

still considering precisely how we should proceed. I hope that I shall be able to make things clearer on that tomorrow. Lastly, I have not the slightest idea what she means in talking about ministerial abuse of statements.

Sir Patrick Cormack: Will my right hon. Friend clarify one point with regard to Friday? Will the House meet for Prorogation only or will there be some business before Prorogation?

Mr. Newton: My expectation, and certainly my hope, is that the House will meet for Prorogation only.

Mr. Harry Barnes: On Thursday, the Leader of the House promised that electoral registration figures for England and Wales would be supplied to the House on 26 March. As the House will prorogue on 21 March, there will be no opportunity to try to use the procedures of the House to discuss those figures if they prove to be inadequate. In those circumstances, will he ensure that the figures are made available to the House tomorrow so that hon. Members who are interested in such matters will still have an opportunity to raise them before the House prorogues?

Mr. Newton: I cannot give the hon. Gentleman that promise off the cuff—not least because I am not the Minister who has responsibility for those statistics. I shall however certainly look into his point, and if there is any possibility of achieving what he wants, I will of course be very pleased to please him, and indeed the House. I cannot add to that.

Mr. Barry Legg: Is my right hon. Friend having discussions with the usual channels in this House and the House of Lords concerning the private Member's Bill, the Public Entertainments Licences (Drugs Misuse) Bill, which progressed unanimously—

Madam Speaker: Order. The Leader of the House has made a very limited statement about tomorrow's business only. He is coming to the House tomorrow to make a further statement. Negotiations are going on about things such as the Bill to which the hon. Member referred.

Mr. Tam Dalyell: On tomorrow's business, is there any chance of a statement—some kind of comment or action—on the subject that I have now indelicately raised four times with the Leader of the House in business questions: the work of the Standards and Privileges Committee in relation to the outpourings of Mr. Mohammed Al-Fayed and the book "Sleaze"?

Mr. Newton: I have referred the hon. Gentleman on one or two occasions to the fact that a substantial report—the one dealing with my right hon. and learned Friend the Home Secretary—on that area has already been published. Beyond that, I am not in a position to make statements from the Dispatch Box on behalf of the Standards and Privileges Committee.

Several hon. Members: rose—

Madam Speaker: Thank you.

Merchant Shipping and Maritime Security Bill [Lords]

As amended (in the Standing Committee), considered.

New clause 2

ASSISTANCE FOR TRAINING

'. In section 56 of the 1995 Act (financial assistance for training), after subsection (3) there is inserted—

"(4) In providing assistance in accordance with this section the Secretary of State shall have regard to the maintenance and development of the United Kingdom's merchant fleet and marine related business and for that purpose shall—

(a) keep under review all aspects of that fleet and business; and
(b) seek the advice of those who appear to him to have experience of that fleet or business.
(5) In this section, 'marine related business' means any trade, business or other activity concerned with the manufacture of, or the provision of goods and services for, or the operation or use of ships and includes maritime educational establishments, marine classification societies, marine equipment suppliers, marine surveyors, marine and naval architects, marine insurance companies, protection and indemnity clubs, provides of maritime financial or legal services, the operators of ports and harbours and shipbrokers.".'—[Ms Glenda Jackson.]

Brought up, and read the First time.

Ms Glenda Jackson: I beg to move, That the clause be read a Second time.
The purpose of the new clause is abundantly clear. It underlines the importance that training has always had not only for the safety of lives at sea but for the maintenance and therefore the ensuring of safety of the ships in which people sail. It is of particular importance given the Bill's framework.
I do not think that it would be an exaggeration to say that this nation has set the benchmark not only for the training of seafarers but for the introduction and maintenance of many of the safety measures that, over the years, have reduced loss of life at sea and been instrumental in steps being taken in this country and in the wider international community on the very serious issue of pollution and its potential risk should such strict safety standards and training measures be eroded. It would however be quite wrong to mislead hon. Members into thinking that what has been is what faces us now.
In common with all other merchant fleets, the British merchant fleet is undoubtedly operating in a severely competitive climate. Over the past 18 years, we have seen a serious decline in the number of ships flying the red ensign. The number of ships on the United Kingdom register has declined from more than 1,200 of 500 gross tonnes or more in 1980 to only 240 ships of an equivalent tonnage today. At the same time, there has been an even more staggering decline in the number of registered UK seafarers. In 1980, there were 60,000 seafarers, but there are just about 20,000 today. That figure includes some officers who are employed on foreign-flag vessels.
As this nation has set the benchmark not only for training but for the maintenance of safety standards on our vessels, British-trained crews are undoubtedly much admired and desired by international competitors. In a study commissioned jointly by the Department of

Transport, the Chamber of Shipping Ltd. and the Marine Society, which was conducted at the University of Wales in Cardiff and published in March 1996, it was, however, identified that the need for trained seafarers is the exclusive preserve neither of shipping companies nor owners but of many land-based related industries.
It is extremely interesting to see the wide variety of businesses, industries and commercial enterprises that are in a sense dependent on having as part of their personnel people who have obtained sea-going qualifications and are experienced in the area. The obvious ones are surveying and ship inspection companies, cargo surveying firms, classification societies, ports and port services and, of special relevance to the Bill, organisations committed to pollution control. The list is long and runs to many pages, and I do not wish to delay the House. The study by the University of Wales in Cardiff identified approximately 17,000 land-based jobs that employers much prefer to fill with ex-seafarers, but the number of mariners—and the number who present themselves for training, certainly in the cadets—has declined.
The Government have taken steps, via the DOCS—development of certificated seafarers scheme—and the Government assistance for training—or GAFT—scheme to encourage people to train as mariners. From conversations I have had, I do not believe that young people are any less willing to look to the sea for their future careers than they have ever been. Last year, at one of our much-prized, internationally recognised nautical colleges, some 1,000 young people who wished to dedicate their lives to the sea competed for a limited number of places.
It is remarkable—and we should take pride in the fact—that 50 per cent. of all ship broking is conducted through the Baltic exchange in the City of London. The City is the primary area for all maritime business, nationally and internationally. People are concerned that if standards of training, and the numbers entering such training, decline, that primacy could be lost.
The purpose of the new clause, which I hope that the Government will consider favourably, is to ensure the widest possible consultation and discussion in the maritime industry on how we can expand and increase existing training schemes, as well as incorporate individual ideas from a variety of sources. It has been argued that the individual, land-based businesses should take on the exclusive responsibility for training, but such training schemes would be dependent on the size of the company. Many such companies, which make a considerable contribution to the nation's economy, are small, and it would be impossible for them to engage in training schemes. If we had wide-ranging consultation and discussion, companies could present a compilation of their ideas.
I shall end where I began. We are a proud maritime nation. We have set benchmarks for the international community in training, standards of seamanship, maintenance and safety procedures. I hope that the Government will look kindly on the new clause, because we should expand our activities in this area, not decrease them.

Mr. Michael J. Martin: I speak in support of the new clause. My father was a merchant seaman. He served as a stoker in the merchant


navy from 1936 until his retirement in the 1960s. He was torpedoed on three occasions during the war. A seaman's occupation affects his family directly. When my father complained about safety at sea, he was disciplined and the family lost wages. A seaman at sea is under maritime regulation and can be disciplined differently from a worker on land, who can complain about health and safety with no repercussions. At sea, it is impractical for a complainant to step off the boat. Seamen who have spoken up about safety have been dismissed and left at the next port.

Dr. Norman A. Godman: In that context, I remind my hon. Friend that, traditionally, if a man was swept overboard from a company-owned trawler, the wages given to his wife or mother were docked from the hour he was knocked overboard.

Mr. Martin: That is true and my hon. Friend may be able to expand on that point. My mother was paid fortnightly through a seaman's allotment. If my father's wages were docked or he was put off the boat in Egypt or Montreal, it might be 14 days before my mother discovered that he had been disciplined. I know that the position has improved, but the point is that good safety training on our sea-going vessels—the few that are left—is a must. Those British men and women who have the honour of serving in our merchant navy are entitled to the best possible training. Those in charge of our able seamen, stokers, stewards and others should also have the best training. I hope that the new clause will improve the situation, and I support it.

Dr. Godman: I am happy to support the new clause. Will the Minister confirm that fishing vessels fall outwith the United Kingdom's merchant fleet? If that is so, I hope that the Minister—if he is sympathetic, as he often is, to our case—will pay serious attention to the need to emphasise the training of our fellow citizens who are employed in marine-related businesses and the fishing industry, as well as those in the merchant fleet.
Safety training is especially important. I need hardly remind the Minister about the two terrible losses that we have just suffered. Allegations were made in Scotland over the weekend that the Arbroath, which foundered a few days ago with the loss of its crew, snagged its gear on a pipeline. Whatever the truth of those allegations, it is essential that those who go to sea, on any vessel, should be given the best safety training. The Minister will not be surprised to hear that such training should include training in donning immersion suits. Men may have only a few minutes to put the suits on. They are not easy to put on, especially in the darkness and if the sea is running and the vessel is going down. That is the sort of training that all our seafarers should be given.
Safety is of the essence, and the Under-Secretary and the Secretary of State have agreed with me on this in the past. I would like the measures dealing with the merchant marine to include also the fishing fleet, where safety is also important. If a vessel is going down, but the men and women on board have time to put on survival gear before going into the water, excellent equipment is important. I told the Under-Secretary in Committee about the French fishermen who had to jump

off their ship west of St. Kilda. Those who had time to put on their survival suits survived, but the other men died quickly. Safety is of the essence, as is safety training.

Mr. Nick Ainger: I wish to support briefly the comments made by my hon. Friend the Member for Hampstead and Highgate (Ms Jackson). Many people believe that the reason for the decline in the British merchant fleet has been the far cheaper charters offered by flags of convenience, and that may be true in some sectors. But we must remember that our continental partners—particularly Norway and Denmark—have been able to maintain substantial merchant fleets and, in certain areas, have expanded them.
The tragedy for the British merchant fleet has occurred in areas where, initially, Britain led the way—I am thinking in particular of the United Kingdom continental shelf, where many of the supply vessels which operated in the late 1960s and early 1970s were owned, operated and crewed by British people. Since then, there has been a significant decline in the proportion of the British merchant fleet operating on the United Kingdom continental shelf. Some of it, admittedly, has gone to flags of convenience with relatively cheap crews, but a significant part of the market has been taken by Norwegian, Danish and German-crewed vessels.
If, as we well know, the officers and crew of Norwegian, Danish, German and Dutch vessels are paid extremely well, why on earth is the British share of the market so small? The same is true in relation to tanker fleets, where the Norwegians and the Danes have been able to maintain a significant and flourishing sector. Any Government must address the issue of why there has been such a huge decline—as described by my hon. Friend the Member for Hampstead and Highgate—in the British sector of the world merchant fleet. We must find out why countries with high-quality training and well-paid crews—any British seaman would give his right arm for their terms and conditions—have been able to maintain, and improve where necessary, their merchant fleets.
Other significant areas must be addressed, such as new build and how we support the merchant fleet not just on the United Kingdom continental shelf, but in the world market. The tragedy is that the British merchant fleet has shrunk to such an extent that it will be difficult to build it up to what we knew and appreciated in the 1960s and 1970s.

The Parliamentary Under-Secretary of State for Transport (Mr. John Bowis): I am grateful to the hon. Members who have spoken in the debate. In moving the new clause, the hon. Member for Hampstead and Highgate (Ms Jackson) talked about this country's great maritime traditions, and she was right. Those traditions have been based on a quality of seamanship that has been the envy of the world, and many of those qualities have been the result of the training given to our seamen.
The hon. Member for Glasgow, Springburn (Mr. Martin)—in a moving tribute to his father's experiences—highlighted some of the risks, dangers and problems faced by our seamen. The hon. Member for Greenock and Port Glasgow (Dr. Godman) reminded us of the most recent tragedies affecting fishing boats and the men who put to sea in them. Our thoughts go to the families of the crews of those two ships which had such a sad end.
The hon. Member for Greenock and Port Glasgow asked whether the fishing fleet was covered by the related section of the Merchant Shipping Act 1995. The Act does apply to fishing vessels, although it does not apply to the matters referred to by the hon. Member for Hampstead and Highgate. The hon. Gentleman rightly drew our attention to the need for equipment and clothing, and we have referred him in the past to the guidance that is available on this matter. His points are well taken on board.
The hon. Member for Pembroke (Mr. Ainger) had a wider shopping list than is addressed by the new clause. However, British training benefits British seafarers—no matter what ship they are sailing in. We should bear that in mind as we look at our training record.
The new clause is unnecessary, but I want to make clear that the Government are very much in favour of consulting those with an interest in seafarer training or those with relevant expertise and experience. We are against imposing needless bureaucracy and superfluous regulation. The Government's record shows clearly that we support well-thought-out and targeted schemes for seafarer training.
I wish to refer the hon. Member for Hampstead and Highgate to the implications of the wording of the new clause, which caused me to have some doubts about it. The problem is what the new clause could do in practical terms. As drafted, the new clause could mean—among other things—that when the Government wished to make an adjustment to a seafarer training support programme, the Secretary of State would be obliged to consult all those presently engaged in the merchant fleet and all those engaged in marine-related businesses, as defined. It could also mean that the Secretary of State would be obliged to consult all retired members of the merchant fleet and all retired practitioners in marine-related business.
There are issues on which it would be valuable to have the advice of harbour operators, naval architects, manufacturers of the specialist equipment used on board ships and ship builders but, at first sight, the new clause would seem to oblige the Secretary of State to consult them all—whether they had relevant experience or not. The hon. Lady developed her point to make clear that she is not looking for something rigid, but for as wide and as sensible consultation as possible.
The hon. Member for Hampstead and Highgate referred to two training support schemes by the Government. The GAFT scheme has been running since 1988 and assists cadet officers. Since 1988, it has helped to fund some 4,000 trainees at a cost in excess of £18 million. During that time, no eligible candidate has been refused assistance. Junior officer training is supported by the DOCS scheme, which is in its third year of a pilot exercise that has helped to provide nearly 1,000 junior officer berths.
The Department of Transport currently spends some £4.3 million a year on these highly successful schemes, and the value and skills of British seafarers are recognised the world over. We estimate that some 5,000 British seafarers work on foreign-owned and flagged tonnage. British seafarers and their training are success stories of which we should be proud. We have kept the operation under review and we have proposals to integrate the

programmes to make better use of funding. We are consulting the relevant bodies, including training providers, trade unions and ship owners. We do all that already.
Our assistance for seafarer training also takes account of the need for trained seafarers in shore-based establishments, especially those that constitute what we know as maritime London. The hon. Member for Hampstead and Highgate paid eloquent tribute to the Baltic and others. As she said, the consultation under way on changes to our training support scheme follows the study by the University of Wales that was jointly commissioned by my Department, the Chamber of Shipping and the Marine Society. That underlines the Government's recognition of the importance of the contribution made by British shipping as a whole to the nation's well-being.
Because we have kept developments in the merchant fleet under review over the years we have been able to take steps to promote the competitiveness of British shipping. Apart from the generous support that we have offered to seafarer training we have, among other things, changed the registration law to allow bareboat charter vessels on the United Kingdom register and introduced roll-over relief on capital allowances to encourage the replacement of aging tonnage.
We do a great deal already, and to that extent the new clause is not necessary, but in the spirit of co-operation that has prevailed on the Bill in both Houses, and in the spirit of Donaldson, to which we have tried to listen and respond at all stages, I am content to accept the new clause.

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Ms Glenda Jackson: I thank the Minister most sincerely for accepting the new clause and for underlining the spirit of openness and eagerness to ensure that the Bill completes its passage through the House which all of us who had the privilege to serve on the Committee have enjoyed. We all benefited from the great expertise on particular subjects that resided in more than one member of the Committee.
It was not our intention in tabling the new clause to place an enormous burden on the Secretary of State or his Department, necessitating consultation with absolutely everybody with any association, however remote, with the maritime industry, whether at sea or on land. It is undoubtedly the case that practical experience is usually the greatest teacher, and no classroom is more severe than that of the sea. Much expertise and experience can be brought to bear.
It is important to note that the Bill will place new requirements on various parts of the maritime industry. Consultation and the sharing of knowledge and experience can bring benefits to all concerned. Information technology is making inroads in what have been the traditional methods of navigation and it is important that training should keep pace with the scientific and technological advances.
Once again, I am grateful for the Minister's acceptance of the new clause.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New clause 4

APPOINTMENT BY SECRETARY OF STATE OF ADVISORS ON MARINE SALVAGE, & C.

'.—In section 137 of the 1995 Act (shipping casualties), after subsection (5), there is inserted the following subsection—
(5A) The Secretary of State shall appoint such persons as he thinks fit to advise or assist him in connection with marine salvage and other matters relating to the exercise and performance of his duties under this section.".'.—[Mr. Ainger.]

Brought up, and read the First time.

Mr. Ainger: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Michael Morris): With this, it will be convenient to discuss also new clause 5—Duties of the Secretary of State in relation to marine pollution—
'.—After section 293 of the 1995 Act there is inserted the following section—
"Duties of the Secretary of State in relation to marine pollution
293A. It shall be the duty of the Secretary of State—

(a) to carry out regular reviews of emergency salvage capacity in United Kingdom waters, including need, availability and potential funding sources; and
(b) to ensure that adequate emergency salvage capacity is provided in United Kingdom waters, as identified in reviews carried out in accordance with paragraph (a), above.".'.

Mr. Ainger: New clause 4 developed from the clause stand part debate in Committee, in which I said that clause 2 was in the Bill because the marine accidents investigation branch made three separate recommendations in its interim report published on 22 November 1996: to give legal status to the marine pollution control unit's national contingency plan; to give the Secretary of State additional powers to direct harbour authorities, harbourmasters and pilots; and to give the Secretary of State or his officials the right to charter vessels, aircraft and equipment in the commercial sector to carry out an anti-pollution operation.
It is worse than useless to give the Secretary of State those powers if he cannot sensibly exercise them. I am glad that he is here. I remind the House of the meeting that he and I had at 11 o'clock on 20 February, the day after the Sea Empress made her final grounding and spilled about 30,000 tonnes of oil on the falling tide. I asked him why he had not intervened and exercised his considerable powers under the current legislation between 15 February, when the vessel first ran aground, and the day of our meeting.
I am sure that the Secretary of State will confirm my precis of our conversation. He said that he felt that he could not intervene, because the salvors were acknowledged as being world class and he had no expertise with which to countermand their policy and decisions, and that he was afraid that if he exercised his powers the salvors' tugs, equipment and expertise would be removed.
That is the key issue. We all want the risk to be reduced wherever possible, and if an accident occurs we need to be able to handle it as best we can, with all the technology

at our disposal, to reduce the impact on the environment, but if, with the best will in the world, we give the Secretary of State those powers, we must also provide him with the independent expertise that could advise him if a salvage or towing operation were going wrong.
In Committee, the Minister tried to reassure us that measures had already been taken. He said that the contracted emergency towing vessels based at Dover, Falmouth and Stornoway had salvage experts attached to them. That assurance does not bear close examination. If we need all-year-round expertise, and its source is on the emergency towing vessels, those vessels would have to be on charter all year round, which they are not: they are chartered for only six months of the year; so for six months of any year there is no contracted salvage expertise available to the Secretary of State.
The three emergency towing vessels cover only the three sectors identified by Lord Donaldson and by Captain Belton, so if a casualty were to occur well up the east coast, in the middle of the North sea, it would be a significant distance from the existing covered sectors and the expertise would not be readily available.
Perhaps the most important point is how independent and objective any salvage expert who is part of a salvage operation will be. The Minister has told us that salvage experts will be on the vessels. The House will be interested to know that, under the current contract between the salvage or towing companies and the Coastguard agency, 60 per cent. of any proceeds from a successful salvage operation will automatically go to the salvor and only 40 per cent. to the Department of Transport. Again, there is a question mark over the independence of the people who are attached to the emergency towing vessels.
How do we give the Secretary of State that day-in, day-out, year-in, year-out, objective and independent expertise so that he can exercise the powers that previous Acts have given him and the Bill would give him? The Sea Empress disaster has clearly shown us that he did not have expertise in which he was confident and could place his trust. That is vital. If one lesson has to be learnt from the Sea Empress, it is that the Secretary of State must have independent and objective advice constantly available to him. That is why I tabled the new clause, which would put into the Bill the requirement for the Secretary of State to have such marine salvage expertise.
The Government were generous on new clause 2. I hope that they will show similar generosity on this important issue.

Mr. Matthew Taylor: I shall speak to new clause 5, which is in my name and would make it a duty for the Secretary of State to carry out regular assessments of the availability of emergency salvage capacity in United Kingdom waters—an issue that I raised in Committee. It would also place a duty on the Secretary of State to ensure the provision of adequate salvage capacity based on the information obtained through such a review.
It is not a question of who funds the capacity—it is likely to be done through the private sector—but of the role of the Secretary of State in ensuring that such provision is available. I want to put an end to the considerable delays in ensuring that emergency salvage tugs are available in areas that are at risk from shipping. In Committee, the Minister argued that the question


concerns the extent to which the Government should provide or ensure such salvage facilities. Lord Donaldson was in no doubt that the duty of ensuring that adequate cover was available lay with the Government. The fact that he also considered that tug ownership should remain primarily a private sector service was not intended to allow the Government to leave areas exposed to an avoidable pollution incident while they considered funding options.
In Committee, the Minister was reminded of the relative costs of salvage provision and of an oil spill, not all of which can be recovered from the ship's insurers or oil pollution compensation funds. Oil spills cost tens of millions of pounds, and it is highly desirable that the polluter should be asked to pay for the cost of pollution prevention, but coastal communities should not be left at risk while the issue is resolved.
When a similar amendment was discussed in Committee, the Minister questioned the meaning of "adequate". The new clause would give the Secretary of State the means of assessing what would constitute adequate emergency salvage tug cover. The Minister may argue that that already happens, but by making it a duty the new clause would ensure that the Secretary of State responded quickly to such assessments—certainly in less time than it has taken to implement some of Lord Donaldson's recommendations.
The Minister might question the meaning of "regular". He might suggest an interval that he would recommend for such a review and which is current practice, so that should not be a concern. Reviews should not be triggered solely in response to accidents. Under the new clause, the Secretary of State would be charged with ensuring that adequate salvage capacity was available in the period between reviews.
In Committee, the Minister also argued, in relation to a similar amendment, that a function of the Secretary of State
did not impose an obligation."—[Official Report, Standing Committee A, 4 March 1997; c. 116.]
The new clause has been redrafted to take that comment into account. The Minister's comment raises some concerns, however, about other provisions in schedule 6, which I had understood would place an obligation on the Minister. If his comment is correct, they would not do that.
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An interim recommendation of the marine accidents investigation branch into the Sea Empress called for the national contingency plan to be given legal status. The Government have implemented the recommendation by seeking to add, through this Bill, the preparation of a national contingency plan to the functions of the Secretary of State under section 293 of the Merchant Shipping Act 1995. If the Minister objects to the new clause, perhaps he could clarify, on the basis of his previous comments, whether the preparation of such a plan should be made a duty of the Secretary of State instead of a function. It now seems less than clear whether that is the case.
The tug in the western approaches was not in place when the Sea Empress ran aground in February 1996. Lord Donaldson highlighted the need for a tug to be placed at that location in May 1994. There was a considerable time gap, and if things had been done as suggested there might have been a very different outcome. It is to be hoped that there will not be another case that so clearly illustrates the cost to the marine environment and the coastal communities that rely on it of delaying the provision of adequate emergency salvage capacity around the UK coast. The new clause would place the necessary obligations on the Secretary of State both to find out what is needed and to act on the conclusions.
I have one further question for the Minister. In Committee, when we debated the issue, he said that there might be an announcement on the measures to be taken for the winter of 1997–98.I do not think that one has been made, unless I missed it. Can he confirm whether he will be announcing a continuation of the three winter tugs? To date, they are in place only on a trial basis, and it is important that such cover is continued. I know that the Minister agrees in principle, but it would be helpful if an announcement were made.

Dr. Godman: I have considerable sympathy with both new clauses. I remind the Minister—if he needs a reminder—of what might have happened west of the Western Isles with the Panamanian-registered Soro. Perhaps I may say, in response to a comment my hon. Friend the Member for Pembroke (Mr. Ainger) made, that we always have a problem when tankers run into difficulties, because the owners place enormous pressure on their captains. We found that with the Exxon Valdez: the captain was reluctant to send for assistance. The same held true for that terrible foundering off the Shetland coast: there seemed to be some reluctance on the part of the captain to call for assistance. That was not the case with the Soro, as I am pleased to say that Captain Jim McFadden, a constituent of mine, acted promptly—as the Minister will agree in his response, I am sure.
In relation to the measures proposed in the new clauses, I want to know what information the Minister has about the Soro. There could have been a serious incident—that word is not strong enough. That august journal the Greenock Telegraph stated last Wednesday:
A Greenock tanker captain has averted what could have been a major maritime oil disaster.
The Panamanian-registered Soro ran into difficulties after encountering storm force conditions off the coast of Lewis.
That means the west coast of Lewis—the deep-water route—where the vessel should have been. As the Minister knows, I have always argued that such vessels should not use the Minch in heavy weather.
The report continues:
The severe weather damaged the ship's steering but Captain Jim McFadden of Greenock managed to bring the vessel and her cargo of 284,000 tonnes of crude oil to safety—preventing what could have been an environmental catastrophe.
Tugs rushed to the aid of the Soro and brought her to the Clyde for repairs. This morning she left the river to continue her voyage to Canada.
Were Government inspectors involved in inspecting the vessel's seaworthiness before she left the Clyde to continue her voyage to Canada?


Captain McFadden acted promptly to avert danger by alerting the emergency tug at Stornoway, but there have been cases where captains, even when their ships were in serious trouble, have been reluctant to send for an emergency tug because of the cost. The new clauses deal with the problem of unscrupulous owners who let their captains and crews know their views about the need to avoid what they regard as unnecessary expense. They tell captains to try to effect running repairs and to get their engineers to deal with the faulty steering or whatever and not to call out a tug because of the cost. The hon. Member for Orkney and Shetland (Mr. Wallace) will know that some owners put that terrible responsibility on captains. In the case of Captain McFadden, there were no problems because he behaved in the honourable tradition of seafarers and sought to protect both his crew and the marine environment by sending for the tug promptly. He is to be complimented for his actions, but I worry about unscrupulous owners putting intolerable pressure on their captains.

Mr. James Wallace: I welcome the new clauses as an opportunity to raise important issues relating to salvage tug capacity around the United Kingdom. This gap in our marine pollution prevention measures was identified in the Donaldson report. I echo the request for confirmation that, at the very least, the three tugs that have operated in the winter months recently in Dover, Stornoway and Falmouth will continue.
My concern relates to the presence of adequate salvage tug capacity in the waters around Orkney and Shetland. The Minister knows that I have taken the matter up often. On 11 December, I was fortunate in being able to raise the matter in an Adjournment debate in the Scottish Grand Committee. I do not propose to repeat the points that I made, which are still relevant.
In Committee, when my hon. Friend the Member for Truro (Mr. Taylor) spoke of the need for salvage capacity around Orkney and Shetland, he received a reply that has become familiar. The Minister said:
Both the Donaldson report and the Belton report on tugs referred to the waters there as being of secondary risk—that is their definition, not mine."—[Official Report, Standing Committee A, 4 March 1997; c. 116.]
I must accept that, but the Department of Transport has not addressed the fact that while Captain Belton's emergency towing study team's report, which was commissioned by the Coastguard, found that in general it was a secondary danger area, it also found that there was a particularly high risk during the winter months. That is self-evident to those of us who live there.
Captain Belton's study team recommended that the area should be provided with emergency towing vessel cover from the beginning of October until the end of March. The debate gives the Minister an opportunity to respond to that and to update the House on what the Minister of State, Scottish Office told me. He said:
The Coastguard Agency has been in correspondence with commercial enterprises in Shetland to consider possible joint arrangements in the provision of emergency towing, and how these might be of benefit. The discussion will continue, but without commitment at this stage."—[Official Report, Scottish Grand Committee, 11 December 1996; c. 47.]
I would welcome an update on any discussions that have taken place with private commercial enterprises in Shetland. The Minister could also comment on the fact that,

in its evidence to the Donaldson inquiry, the harbours department of Orkney Islands council displayed a willingness to discuss partnerships to ensure that adequate salvage capacity—not the capacity already there, with tugs doing harbour jobs in both Scapa Flow and Sullom Voe—would be available as a joint venture in Orkney as well.

Mr. Bowis: I am grateful to the four hon. Members who have spoken. The hon. Member for Pembroke (Mr. Ainger) introduced the debate on new clause 4, and the hon. Member for Truro (Mr. Taylor) spoke to new clause 5. At the outset, I must say that both new clauses are unnecessary.
New clause 4 seeks to give the Secretary of State powers that he already has, although it does not use, as the hon. Member for Pembroke suggested it should, the words independent or must. The Secretary of State can already seek the advice and assistance of experts in or outside Government, as he thinks appropriate. We do not need new primary legislation for that. The hon. Gentleman nevertheless raised some important issues. I merely suggest gently that he is being premature with some of them. The review of the national contingency plan will, of course, have regard to the lessons learned from the Sea Empress incident and of any relevant recommendations made by the marine accident investigation branch. Clearly, if there is evidence that a particular sort of expertise has not been sufficiently available in the past, it can and will be addressed.
The conduct of salvage operations is one of the many aspects of the Sea Empress incident that are being considered by the MAIB. It would not be appropriate for me to guess its conclusions. The chief inspector expects to present his report to the Secretary of State by the end of the month. It will be published as soon as possible thereafter. New clause 4 is unnecessary and I hope that the hon. Member for Pembroke will seek leave to withdraw it.
The hon. Member for Truro mentioned our debates in Committee, where we debated this issue at some length. In practice, the Secretary of State already does what new clause 5 suggests. To make that a duty seems unnecessarily inflexible. It would impose a duty on the Secretary of State
to carry out regular reviews of emergency salvage capacity".
It does not specify how often that should be done, as the hon. Gentleman acknowledged.
New clause 5 imposes a further duty
to ensure that adequate emergency salvage capacity is provided".
It still does not specify what adequate means. While I take the point of the hon. Member for Truro about having a stab at it, it is still vague. It is a useful new clause for debate, but not for legislation.
We had a full and useful debate on provision of emergency towing vessels in Committee in response to an amendment tabled by the hon. Member for Truro. I can assure the hon. Member for Truro and the hon. Member for Orkney and Shetland (Mr. Wallace) that, since then, we have made the announcement—the hon. Gentleman must have missed it. We have announced that tugs have been retained to provide cover for a further winter in the Minches, the Dover strait and the south-west approaches.
As I said in Committee, we will be undertaking further analysis of the trials to date—we are not waiting for next winter—so that the benefits of the provision of such Government-funded vessels can be fully assessed. It is right that we should carry out a careful evaluation of the costs and benefits of the trials to date; the public expenditure involved, of about £1 million per tug per winter, is not negligible. In the light of the evaluation, which we are now embarked upon as a matter of urgency, we will reach decisions on the longer-term provision of Government-funded tugs, how many there should be, where they should be located and for what period of the year.
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I hope that my comments have answered the queries of the hon. Member for Orkney and Shetland. His points, which I have been unable to respond to in detail today, will be taken into account in that review, as will many of the points made by the hon. Member for Greenock and Port Glasgow (Dr. Godman). The hon. Gentleman reminded us of the incident involving the Soro, which was skilfully captained by one of his constituents. In that incident the request was made for support, the tug was available and set out. As the hon. Gentleman will recall, before it reached the ship, the ship was able to get under way on its own and subsequently made its own commercial arrangements for tug support.
The hon. Gentleman referred to the Minches, where it is always a matter of trying to strike the right balance between the protection of the environment and the protection of life—hence the routing in the Minches. I know that the hon. Gentleman feels strongly about that issue. It is a matter of using the deep channel whenever it is sensible, and using the protection of the coastline when necessary.
The hon. Gentleman also referred to cost. We are talking in general terms of the costs being the responsibility of ship owners. The hon. Member for Truro made it clear that he was not looking for wider public funding, but wanted an assurance that we would ensure that adequate provision was made. We shall take account of any comments or recommendations made in the MAIB report into the Sea Empress when it is to hand.
In the light of the work in hand and the announcement that the Government will fund three tugs for a further winter, I hope that the hon. Member for Truro will be reassured and that the hon. Member for Pembroke will feel able to withdraw his new clause.

Mr. Ainger: We have had a disappointing, but not unexpected, reply from the Minister.
I wish to comment on new clause 5 and the Minister's response to it. It is worth reminding ourselves that chapter 20, paragraph 127 of Lord Donaldson's report clearly recommended that there should be all-year-round emergency towing vessel cover in the Dover strait, the western approaches and north-west Scotland. That report led to Captain Belton's report, which was published one year later, in May 1995. He concluded that the primary

danger areas were Dover, the Hebrides and the south-west approaches. Captain Belton's report recommended that emergency towing cover
should be provided throughout the year in the Primary Danger Areas of DOVER, HEBRIDES and the SOUTH WEST APPROACHES; and for the winter only"—
the point made by the hon. Member for Orkney and Shetland (Mr. Wallace)—
(1 October-31 March) in the Secondary Danger Areas of FAIR ISLE and NORTH CHANNEL.
The final report commissioned by the Coastguard agency—the emergency towing vessels trial report—stated, in its conclusions at paragraph 46:
The two winter trials have taught us a lot about operating emergency towing vessels. We know what they cost and we have seen their potential benefits. Essentially they are an insurance policy and as such only pay off when an accident happens.
The paragraph concludes:
The trials support the broad conclusions reached by the Donaldson Inquiry and Captain Belton's study team.
I am disappointed. How many more reports shall we have before the recommendations 0made by three objective committees are taken up? They have made it perfectly clear that, in their view, the emergency towing vessels should be in the key areas—the primary danger areas—all year and in the secondary danger areas, which were referred to by hon. Friend the Member for Orkney and Shetland, for six months of the winter period. I am worried that, yet again, we shall have a winter-only charter and another report. My great fear is that we shall have a repeat of the Sea Empress disaster, and not necessarily in the winter months.
I shall now comment briefly on the Minister's reply to new clause 4. He says that it is unnecessary because the powers already exist and the Bill contains additional powers. As I 0explained earlier, the powers already existed but could not be exercised because the Department of Transport did not have the confidence to come up with an option different from that put forward by a salvor who undoubtedly had a world-class reputation.
My fear is that we are currently dependent on the review of the national contingency plan including in its recommendations that the Secretary of State should have that expertise available to him. My argument is that if the Secretary of State has to exercise powers in relation to a salvage operation, high-quality salvage expertise should be available to him—I think that most people with an objective view would accept that as a sensible argument—but the Minister is saying that unless the national contingency plan review makes that suggestion, and unless the MAIB makes that suggestion, the Government may not implement it. That is why I have argued that the provision should appear on the face of the Bill so that every Secretary of State, whoever he or she may be, must have that expertise available to him or her.
I am conscious that we should have to await those reviews. I hope that, as they are on-going, the people who are producing them are listening to our debates, or reading the transcripts of them, and taking on board the points that have been made in a purely non-political way. Sensible points are being made by people who have built up a certain amount of experience and expertise. The hon. Member for Orkney and Shetland and I have done so through direct experience of major pollution incidents in our constituencies.
I hope that those who are producing the reports have listened to what has been said and will seriously consider what is being proposed. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Clause 2

POWERS OF INTERVENTION WHERE SHIPPING ACCIDENT THREATENS POLLUTION

Mr. Wallace: I beg to move amendment No. 11, in page 4, leave out lines 1 to 5.
The amendment would delete references to harbour master and harbour authority from the list of those to whom the Secretary of State could give directions where there was a risk of significant pollution in United Kingdom waters.
The background to the amendment is that the original Bill—the draft Bill that went out for consultation last year, which exercise probably helped to smooth the passage of the legislation through both Houses—did not include the provision to which the amendment relates. The interim report of the MAIB on the Sea Empress grounding and a powerful intervention from Lord Donaldson on Second Reading in another place led the Department of Transport on 2 December to issue a consultation paper regarding the possible extension of the intervention powers of the Secretary of State. The consultation paper required a response, or at least initial views, by 16 December, so there was little time for consultation. It is therefore important that we examine the reasons for that extension of the Secretary of State's power.
In his response to clause stand part in Committee, the Minister did not adequately explain the scope of the powers or the circumstances in which they would be used. He said:
To some extent we must await the MAIB's report and should not prejudge that.
He added:
The fact that we have announced a review of the national contingency plan is evidence of how seriously the Government take the problem. We are trying to establish whether procedures are adequate and whether the plan needs revision. We are going to make it statutory through this legislation. I hope that that will provide some reassurance for the time being on this important matter.—[Official Report, Standing Committee A, 25 February 1997; c.28.]
In other words, there was little scrutiny of the need for this power.
In its response to the consultation document, Shetland islands council, which is the harbour authority responsible for Sullom Voe, expressed considerable reservations about the extension of the power. I do not have to hand a copy of the submission from Orkney islands council, which is the harbour authority for Scapa Flow and the oil traffic that goes in and out of the Flotta terminal, but I understand that Orkney council shares those reservations and concerns. In its response, Shetland islands council said:
Probably the acid test for Central Government in this matter is whether or not the use of such a power would ever be envisaged or contemplated. It is unlikely to be used, it should not exist and, instead, a more effective approach will be to ensure the existence of a comprehensive legal framework for effective control at a local level.

Later in the submission, it states:
Directions given, on-the-hoof, in the heat of an incident are no substitute for a rational and properly thought out plan with all lines of communication, authority and accountability clearly established. Again, this Council believes that the Secretary of State already has sufficient powers available to him and these, together with properly developed plans, will secure actions appropriate to the area and the nature of the incident.
The amendment seeks an explanation from the Minister of how, and in what circumstances, he envisages the powers being used. I also want an assurance that they really are powers of last resort. They should not, in any way, be seen as a substitute for proper discussions with harbour authorities to ensure that there are well worked-out plans for dealing with emergencies in each harbour authority area. The tone and the considerations that motivated the response by the harbour authorities in my constituency suggested that there is no substitute for dealing with these matters in advance. Of course, some decisions will have to be made in the heat of an emergency, but proper plans will ensure that decisions made under pressure are more likely to be the right ones.
I conclude by noting the comments of the hon. Member for Pembroke (Mr. Ainger) in Committee on clause stand part. He questioned what expertise would be available to the Secretary of State in circumstances where he might have to exercise the power. He said:
I am sure that the powers will be delegated to the director or the chief executive of the Coastguard or to someone in the Ministry of Defence, but with the best will in the world, they are not salvage experts. They do not have the professionalism, which comes from many years of experience, to countermand an organisation that also claims to be expert in the field."—[Official Report, Standing Committee A, 25 February 1997; c. 26.]
Many of those who daily deal with our harbours have built up considerable expertise. I am sure that it is not the intention of the clause to sweep that aside and to enable the Secretary of State to swoop in with such advice as he has available to him. However, the purpose of the amendment is to obtain some information on how the Minister envisages the powers developing and a reassurance that they will not be used as a substitute for adequate local planning.

Mr. Bowis: I am grateful to the hon. Member for Orkney and Shetland (Mr. Wallace) for raising this issue and for the terms in which he has done so. I hope that I can give him the reassurances that he seeks.
The amendment would remove the Secretary of State's power to give directions to harbour masters and harbour authorities. That would restrict his ability to monitor and, if necessary, take overall control of counter-pollution operations following a maritime casualty. As the hon. Gentleman correctly said, the widening of the intervention powers to cover harbour masters and harbour authorities was an interim recommendation of the MAIB. That recommendation received widespread support, including that of the noble and learned Lord Donaldson, whose words we listen to with considerable respect, as we do to the MAIB.
7.45 pm
The hon. Gentleman may be reassured to hear that we would not expect to use those powers often. When we did, we would seek to minimise the consequences for the commercial operation of ports, but, as Lord Donaldson


said in another place, where a number of people are involved with a casualty, including a harbour authority, the buck must stop with someone, and that person should be the Secretary of State or his representative on the scene.
The hon. Gentleman asked me to spell out what the new powers would do. They will not alter our preference for co-operation rather than coercion. That is set out in the national contingency plan and I can assure him that only in cases of extreme urgency would we give a direction. Our intention is that, in general, we would use the powers simply to require salvage plans to be submitted for agreement by the Secretary of State's senior representative. We would not usually invoke the powers to take overall command of an operation, but, where the situation warrants it, we would have the power to intervene directly.
The United Kingdom's national contingency plan has been developed in conjunction with harbour authorities and others and the hon. Gentleman is right to say that that is the proper way to proceed. Regulations imposing a duty on harbour authorities to have plans are currently being drafted and will shortly be circulated for comment. The plans will deal with the response that a harbour authority might be able to make to an incident. No plan—however good—can cater for all circumstances, which is why a reserve power of direction is needed. That is proposed in the Bill and the amendment would remove that power in respect of harbour authorities.
The House would be unwise to disagree with the MAIB, which originally proposed this measure, or with the overwhelming support that the measure has received, including that of Lord Donaldson. With those reassurances on how the power would be used and when it would not be used, I hope that the hon. Gentleman will feel able to withdraw the amendment.

Mr. Wallace: I welcome the clear terms in which the Minister has set out the way in which he would expect the power to be used or not used. It is the view of his Department—and, I assume, of the responsible agencies of his Department—that the emphasis should be firmly on forward contingency planning. Every encouragement should be given to the development of those plans, over and above that which already exists. With those words from the Minister on the record, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Frank Field: On a point of order, Mr. Deputy Speaker. Later this evening, we are to debate a Pensions Measure and the only contribution that I wished to make to that debate was to thank the Second Church Estates Commissioner, the right hon. Member for Selby (Mr. Alison), for the skilful and graceful way in which he has presented the Commissioners' business to this House. As I have to absent myself from the Chamber for a short time to make a satellite link-up with New Zealand, can you advise me as to whether there is any way in which I can get my comments into the Official Report before leaving, just in case the pensions business is completed before I return?

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): Even after five years in the Chair, I am unable to help the hon. Gentleman with that problem.

Clause 4

POWERS OF FIRE AUTHORITIES

Dr. Godman: I beg to move amendment No. 1, in page 5, line 6, leave out 'whether or not'.
The Minister knows of my concern about the clause. I begin by quoting the excellent notes on clauses provided by his officials, paragraph 3 of which reads:
This clause adds a new paragraph (dd) after paragraph (d) enabling fire authorities to employ the fire brigade or use their equipment anywhere at sea, whether or not within the United Kingdom's territorial sea".
If it were accepted, which I doubt it will be, the amendment would change the clause by leaving out the words "whether or not".
In response to the Minister's kind and generous invitation to write to him with my reservations, I did so—and I see that he has received my brief letter. In it, I quoted a letter that I received from Firemaster John Jameson of Strathclyde fire brigade. I know of no firefighter who would refuse to go to the assistance of someone caught in an emergency, but the clause creates real problems for firemen and firewomen.
John Jameson says in his letter, of which the Minister has already seen a couple of paragraphs:
The Fire Service in Strathclyde for humanitarian reasons would wish to respond to any life threatening incident, including an incident at sea. The response can only be effective if the fire fighters are well trained, have reliable transportation and are properly equipped for the incident. Section 1 (i)(a) of the 1947 Act states that the Fire Authority shall secure the service of such a Fire Brigade and such equipment as may be necessary to meet efficiently all normal requirements".
Firemaster Jameson goes on to say:
Fire fighting at sea is such a rare event in Scotland that it could not be described as a normal requirement for Fire Authorities to be equipped and trained to meet. It therefore requires special training and specialised equipment to enable fire fighters to deal safely with a deep sea incident.
My hon. Friend the Member for Linlithgow (Mr. Dalyell) has mentioned the specialist training facilities at the centre in McDonald road, Edinburgh. I have visited those facilities, where I know many mariners have been trained to fight fires at sea in simulated conditions. I think that John Jameson is right to stress the fact that fighting fires at sea requires special training. He goes on to say in respect of health and safety:
The requirements of the Health and Safety legislation, quite properly in my view, place very stringent responsibilities upon the Fire Authority and the personnel of the service to ensure adequate steps have been taken with regard to the health and safety of persons. To meet the requirements of the legislation the Brigade would be required to provide the following: all personnel would require to undergo survival at sea courses and attend revision courses. Survival suits including helmets would be provided for all offshore personnel. Special carriers for firefighting equipment would have to be purchased. Extensive ship firefighting training would require to be carried out covering not just wholetime fire personnel but also the retained members. Helicopter training would be extensive and costly in financial terms. Boat to boat transfer training for the high seas would be costly in time and finance".
I have quoted this letter at length because it comes from a highly experienced Scottish firemaster, and no one in this place should disregard the serious concerns voiced by such a fine and honourable man.
There are other problems. Professor Robert Black, professor of Scots law in the faculty of law at Edinburgh university kindly gave me a copy of the opinion that he wrote for the Fire Brigades Union. He had a number of things to say that the Minister and his officials need to "take on board"—perhaps I should say, need to take seriously.
Professor Black says:
The very real likelihood in an offshore firefighting situation that the person whose negligence caused the firefighter's injury, and who is thus the potential defender in any action for damages, is not domiciled in Scotland, presents grave legal and practical obstacles to the successful pursuit of the firefighter's claim".
We all of course hope that no one will ever be injured in an emergency, but injuries are inflicted on firemen. He goes on to say:
These difficulties are exacerbated if the firefighter's injury was sustained outwith United Kingdom territorial waters (generally twelve nautical miles from the coastal low-water line)".
The professor is saying that the general rule under Scots law is that a person seeking legal redress must apply for it in the courts of the place where the person against whom it is sought is domiciled. He goes on to say that if an injury from an emergency is sustained in our territorial waters, the Scottish courts could then deal with such a claim:
It follows that in all cases where the accident to the firefighter did not occur in Scotland (as defined above)", the injured person
would have to seek redress against a defender whose domicile was outwith Scotland in the home courts of that defender and not in the courts of Scotland".
I should like to hear the Minister's response to this key element in the opinion. Professor Black goes on to say:
If the delict occurred in the territorial waters adjacent to the coast of Scotland then Scots law alone falls to be applied as both the lex fori and the law of the place of the delict (lex loci delicti): see Private International Law: Choice of Law in Tort and Relict".
He then quotes his sources, and continues:
If the delict occurred on the high seas (and does not fall within … the above) … and is not purely internal to a single ship, then the maritime law of Scotland alone falls to be applied … If the delict occurred on the high seas (and does not fall within sub-para (a) above) and is purely internal to a single ship, the double actionability rule applies and the pursuer must satisfy the court of the entitlement to damages under both the law of the flag (or port of registry) of the ship (as the lex loci delicti) and Scots law (as the lex fori)".
Those are important warnings; the professor is firing across the Minister's bows.
The professor talks about a practical difficulty in Scotland. I do not know how the law stands in England, but before cases are heard in Scottish courts precognitions—a statement made before a court hearing—are frequently sought. The professor asks how such precognitions can be obtained when a firefighter has been injured on the high seas tackling an emergency. He claims:
More seriously, there is no mechanism whereby witnesses resident outside the UK can be compelled to come to Scotland to give evidence at a proof here. Where a foreign witness is willing to give evidence, but is unwilling to travel to Scotland to do so, it is normally possible for the Scottish court to arrange for that witness's evidence to be taken, before a commissioner appointed by the Scottish court, in his country of residence.
He refers to paragraph 35.11 of the "Rules of the Court of Session 1994".
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Another means of obtaining evidence from overseas is the letter of request procedure, but it is not very satisfactory because, under the Hague convention on the taking of evidence abroad, dated 18 March 1970,
there can be no guarantee that the foreign court will accept the request, or will act upon it timeously or efficiently. The 1970 Hague Convention has not been ratified by such major maritime flag states as Greece, Liberia and Panama.
There are problems relating to taking firefighters to the scene of the accident by helicopter. If there is an accident, firefighters' families may be unable to claim compensation. Professor Black finishes by saying that
it will be appreciated that the process of obtaining damages for an injured firefighter against a person or corporation domiciled outside the UK is likely to be a complex, troublesome and expensive one, even where the Scottish courts have jurisdiction. A fortiori is this so where the Scottish courts do not have jurisdiction.
Firemaster Jameson says that there are serious practical problems. He claims that, despite the undoubted commitment of all our firemen and firewomen to go to the aid of those in danger, resources and special training are needed. He points out that firefighters are rarely taken offshore, but let us not forget the Piper Alpha disaster—God forbid that there is ever a repeat of that dreadful event—in which the emergency services, not firefighters but others, were found to be lacking in trained personnel and in resources. Most of the stand-by vessels, which should have been able to react promptly, were old side trawlers, which were useless for tackling that type of emergency. As Lord Cullen readily acknowledged, the crews were remarkably brave men, but their resources—the aging side trawlers—should not have been there.
I know that the Minister will take it seriously when I say that Firemaster Jameson is right to warn of these problems and that the warnings by Professor Black need to be taken on board so that our firefighters can be protected. If they must go to sea to tackle an emergency, they should be able to do so secure in the knowledge that, if they are injured, they will have recourse to adequate compensation—where Scotland is concerned, in our courts.

Mr. Ainger: I shall add a few comments in what I am sure will be a short debate. Before I was elected to this place, I was a member of Dyfed county council and of its public protection committee. That committee ran the fire service in Dyfed, which, since the mid-1980s, has been one of the few fire brigades that has had a ship firefighting capability and has trained a select few of its full-time and retained men for offshore firefighting. Milford Haven is one of the largest oil ports, so there is a constant risk of fire on board ships in, or entering or leaving, Milford Haven.
Interestingly, several times firemen from Dyfed fire brigade have fought fires on board tankers within the confines of Milford Haven port authority. The most famous one was on board a ferry, the Naronna, when she was midway between Pembroke dock and Rosslare, slap in the middle of St. George's channel. There was a fire deep in the vessel, producing a great deal of smoke, as a result of which one passenger died. However, the fire crew was able to reach the vessel, using the search-and-rescue helicopters then based in Brawdy in my constituency, and within an hour of the mayday call


firefighters were on board the Naronna, bringing the fire under control, saving tens, if not hundreds, of passengers' lives.
The other fire brigade with offshore firefighting capability is Kent fire brigade, which covers not only the usual shipping traffic in the Dover straits but the ferries that sail out of Ramsgate, Dover and other ports on the Kentcoast. I know from my experience with Dyfed fire brigade that whenever a new ferry comes into use, the fire brigade trains on board, getting to know it extremely well internally, in case there is a fire.
As we were constantly told by the finance committee of the county council, all that extra equipment and training was not paid for by anyone. One hoped that to some extent that it was taken into account when the grant that then in some cases came from the Home Office was calculated. Bearing in mind the specific risks posed by the presence of a large petrochemical complex on the shores of Milford Haven, it may have been so organised or arranged that, over the years, the Home Office took the additional cost into account when calculating the grant of the county council. That is obviously a matter for debate. I am certain that, when calculating grant for many coastal county councils and fire authorities, no account has been taken of offshore firefighting capability or the need for it.
The Minister needs to understand that we are not talking about a cheap option; the people who fight fires in a house or factory cannot be immediately transferred to an offshore incident. In the brigade, the idea of training firemen to be delivered by lifeboat was once considered. I know from experience that once one is wearing kit to be ready to go into action quickly—perhaps wearing breathing apparatus or almost ready to enter a situation that requires it—on a lifeboat, when the sea is choppy, certain things start to happen, and that is a significant problem. Ideally, training should always be with helicopters and, as my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) said, that costs money and needs proper planning. I do not argue against what has been included in the Bill; I ask that the Minister recognises that my hon. Friend has highlighted a real issue in terms of resources, training and equipment that the fire authorities will require.
My hon. Friend's second point is worrying, because I am sure that the same legal problems, about which he went into great detail, probably apply in England and Wales as well. If there is no recompense in relation to an injury to a firefighter—or even a death—that needs to be clarified very quickly. I am grateful to my hon. Friend for raising these issues, because they are very serious. An offshore firefighting capability would be another tool in preventing pollution and possible disasters on board ferries. The Scandinavia Star was travelling only a short distance between Denmark and Sweden but suffered a serious fire that resulted in nearly 200 deaths on board. There was no offshore firefighting capability to deal with that.
This is a very important issue, and I am grateful to my hon. Friend the Member for Greenock and Port Glasgow for raising it.

Mr. Bowis: I am grateful to the hon. Member for Pembroke (Mr. Ainger), who, in a sense, answered the

point made by the hon. Member for Greenock and Port Glasgow (Dr. Godman) about the need for the ability to fight fires outside territorial waters.
The hon. Member for Greenock and Port Glasgow made important points about equipment, training and so on, and that applies to fighting fires at sea however far out they are. I am sure that his points will have been heard even if they are not totally germane to the amendment. He did me the courtesy of writing to me, as I invited him to do, and I am grateful for his letter, in which he set out some of his concerns. I hope that I can allay them.
Clause 4 is in the Bill as a result of the fire authorities themselves, which asked us to include it because of the lack of clarity on their power to deploy their services to fight fires anywhere at sea, whether or not they are within the United Kingdom's territorial sea—the 12-mile limit. In answer to the hon. Gentleman's general concerns, I repeat the assurance that I gave him in Committee: decisions on whether to deploy their resources at sea will remain a matter for the fire authorities. There can be no question of anybody directing them. It will be their decision whether to respond to a request for help.
In this context, there is no reason to draw a distinction between the territorial sea and waters beyond the 12-mile limit. The fire authorities accept that and, in 1995, a sub-committee of the Scottish Central Fire Brigades Advisory Council said,
it is illogical and unacceptable that fire brigades should be authorised to provide assistance to HM Coastguard by way of attendance at incidents at sea only if such incidents occur within the 12 mile limit".
The report recommended that the law be changed; clause 4 does that, and we have drawn it to the attention of officers of the Strathclyde fire authority.
In his letter to me, the hon. Gentleman raised two points, which he developed this evening: first, that special training and equipment is required. I accept that, but that applies to fires 11 miles offshore or 13 miles offshore. There is no reason to distinguish between fires inside territorial waters and further out. There is a memorandum of understanding between the Coastguard and the Chief and Assistant Chief Fire Officers' Association, which covers operating procedures for fighting fires offshore. If a particular fire authority has concerns about the equipment that it should use in such circumstances, it should discuss it with the Coastguard.
The hon. Gentleman's second point concerned the legal and practical problems that might arise if a firefighter was injured while fighting a fire outside territorial waters. It is correct to say that, in those circumstances, if the firefighter wished to bring an action against a ship owner who is not domiciled in Scotland, the action would have to be brought in the courts of the state of domicile of that ship owner. That reflects the long-standing position on the allocation of jurisdiction between states.
In any event, as I have explained, the clause does no more than allow—I stress the word "allow"—fire authorities to fight fires at sea; it does not compel them to do so. No fire authority has suggested to my Department that that possibility would deter it from fighting fires at sea. Indeed, when the Bill was published in draft for consultation last year, all those who commented on the clause were in favour of it.
I understand the points that the hon. Gentleman raised and am grateful for them, but I hope that in the light of my comments he will feel reassured and will withdraw his amendment.

Dr. Godman: Whoever is in office over the next few weeks will need to study very carefully what Professor Black said in the learned opinion that he gave to the fire brigades union. I have no wish to divide the House on this matter. I have raised the concerns that people have voiced to me and will continue to campaign on their behalf.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5

WASTE RECEPTION FACILITIES AT HARBOURS

Ms Glenda Jackson: I beg to move amendment No. 4, in page 6, line 24, after 'recovered', insert
'without creating a disincentive to those who are expected to use them'.

Mr. Deputy Speaker: With this, it will be convenient to discuss amendment No. 5, in page 6, line 24, at end insert
'; and
'(d) measures to ensure the ease of use of waste reception facilities.'.

Ms Jackson: Thank you, Mr. Deputy Speaker. These amendments would make a valuable addition to an immensely important section of the Bill. As all members of the Committee have acknowledged, the Bill is extremely important, and many of the recommendations of Lord Donaldson's report, "Safer Ships and Cleaner Seas", have been endorsed. We believe, however, that there are still areas within the Bill where improvements can be made. That is why we have tabled the amendments.
We are concerned that the ease of providing waste facilities at our ports is not such as to encourage ship owners to instruct their masters and crews to use such facilities when they are in place. The possible costs of such waste facilities would be a disincentive.
I should highlight that competition throughout the whole of the international maritime industry is fierce, and competition is no less fierce in our ports. Not only are British ports in direct competition with other ports within the European Union but there is competition within the ports themselves. It is not our intention—nor, I imagine, is it the intention of any hon. Member—that waste reception facilities should add yet another competitive burden on our ports, but we have to take the necessary steps to ensure that ships do not take the easy option, which has undoubtedly been the case in the past, of dumping unwanted waste at sea.
There are, of course, well-recorded incidents of waste being dumped more by accident than design, but, as I said in Committee, I well remember that, more than 25 years ago, when I was sailing across the Atlantic and our vessel approached the Sargasso sea—with my limited hydrographic knowledge, I presume that it is about the

middle of the Atlantic ocean, where one would expect to see little or no waste—I saw that the weed within the wide Sargasso sea was thick with detritus that, clearly, had been thrown over the side of vessels.
I regret that I did not have the opportunity to inform my hon. Friend the Member for Linlithgow (Mr. Dalyell) that I intended to refer to one of his speeches, but in the second sitting of our Committee he had occasion to refer to "Beachwatch 1996", in which he and his wife had taken part. The amount of debris that was collected from British beaches during that exercise makes astounding reading. My hon. Friend said:
Debris was collected from 237 beaches in England, Scotland, Wales and Northern Ireland … A total of 291,228 items were surveyed, weighing an estimated 17,518 kg … and filling 2,438 bags."—[Official Report, Standing Committee A, 27 February 1997; c. 34.]
My hon. Friend went on to detail some of the items that had been lifted from our beaches. They were plastic, glass, metal, polystyrene, rubber, cloth and pottery or ceramic items. He spared the Committee's feelings and did not describe in detail items that could be regarded as having landed on our beaches because of sewage.
The evidence that my hon. Friend presented to the Committee, and the evidence that I saw with my own eyes, admittedly many years ago, underlines the seriousness of the problem. Unless the facilities provided at our ports are easy to use and do not create a disincentive, the problem could grow worse in the future. As was said this evening and in our earlier deliberations, good shipowners and good masters will welcome such facilities and use them. We are concerned about ships whose owners and masters are less scrupulous, and where the pressures imposed by an owner on a master to make a fast turnround at the port of call could impact on the use of such facilities.
We have more than 350 ports in these islands, which provide a wide variety of facilities, whether commercial or recreational. No one presupposes that one kind of plan will meet the requirements in every port in these islands, but there must be a requirement on all ports that such facilities as they eventually devise and put in place must not act as a disincentive to vessels that use them, and they must be easy to use.

Mr. Wallace: I strongly endorse the views advanced by the hon. Member for Hampstead and Highgate (Ms Jackson). With regard to the declaration of the North sea as a special area for oil under MARPOL, the marine pollution convention, can the Minister tell us what progress has been made in establishing special area for oil status, as recommended by Lord Donaldson? As that would virtually ban all discharges of oily waste, is the Minister confident that there are sufficient waste reception facilities in UK ports to meet any resulting increase in demand?

Mr. Bowis: On the last point, I can confirm that progress has been made. We have reached the stage where that will occur.
On that happy note, I can pass on to the amendment. We have no difficulty with the aims of the hon. Member for Hampstead and Highgate (Ms Jackson). Harbour authorities in the United Kingdom have for many years been required to ensure the provision of adequate


reception facilities for ships' waste. We will use the power provided by clause 5 to make regulations on waste management planning. We believe that the planning process will ensure that all ports, harbours and marinas comply with the existing requirement to ensure the provision of adequate facilities.
We do not need the amendments, because we can and will deal with the matters covered by them, and they were all covered by the merchant shipping notice that the Marine Safety Agency issued last year. The notice requests that all ports, harbours, marinas and oil terminals develop plans on a voluntary basis pending the introduction of legislation, and recommends that in preparing plans consideration should be given to the assessment and monitoring of the types and quantities of waste discharged, the development of effective procedures for informing port users about waste reception facilities, how the charging mechanism might influence the use of facilities, and measures to ensure ease of use.
Those matters will all be covered by the regulations that we shall make under the power provided by clause 5. The amendments are unnecessary. Clause 5 will shortly be in force, I hope, and we can implement the Bill as an Act for the protection of the seas and seafarers.

Ms Glenda Jackson: In the light of the Minister's reassurance, which is welcome not only to the Opposition but to everyone who has an interest in the Bill, and in the certainty that, although we would have preferred to see the word "disincentive" in the Bill, the end that we all hope to achieve will be realisable, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Order for Third Reading read.—[Queen's Consent and Prince of Wales's Consent signified.]

The Secretary of State for Transport (Sir George Young): I beg to move, That the Bill be now read the Third time.
The Bill set sail from another place towards the end of last year and has had a relatively serene passage before docking in the House tonight. A brief return passage will be necessary to deal with new clause 2, but I hope that that will not be too long delayed.
The Bill demonstrates our commitment to driving up standards of maritime safety and reducing the risk of pollution for our waters and our coastline. We have built on the recommendations in Lord Donaldson's report, "Safer Ships, Cleaner Seas".
Following its introduction, the Bill has benefited from lively, high-quality, informed discussion. I am grateful to my hon. Friends and to Opposition Members for their contributions during the Bill's passage. I am particularly grateful to my noble Friend the Minister for Aviation and Shipping for his role in guiding the Bill through another place, and for the contributions of their noble Lordships. I am grateful to my hon. Friend the Under-Secretary of State, on whose broad shoulders has fallen the responsibility of negotiating the passage of the Bill through the House.
We shall seek to ensure that these important and widely supported measures to improve safety and protect the environment at sea are put into practice at the earliest opportunity.

Mr. Andrew Smith: The Minister earlier referred to the spirit of Donaldson. That is indeed the spirit in which the Bill has been approached by both sides of the House. I commend the expertise and experience of Back Benchers and Front Benchers on both sides. I am especially grateful to my hon. Friend the Member for Hampstead and Highgate (Ms Jackson) and to my other hon. Friends, whose experience in relevant matters has been so evident.
This is a good Bill, which will strengthen security at sea and improve the protection of our maritime environment. That does not mean that it is a perfect Bill. We were pleased to be able to improve it a little with our new clause on training. There are remaining concerns about the availability of salvage expertise, the provision of standby tugs and the operation of waste facilities.
The Government's argument on all those matters has been that the powers already exist or that they are acting anyway. I refer particularly to the designation of marine environmental high risk areas. We were assured that it was the Government's intention to get those designated and that that was expected later this year. We are not satisfied with the progress that the Government have made. They say that the powers exist and that matters are in train. I give a pledge that whereas the present Government have so far failed to designate those areas, the next Government will certainly do so.
The Bill is a step forward. Let us see it passed into law without further delay.

Mr. Wallace: I also commend the passage and Third Reading of the Bill. Subject to some reservations that the hon. Member for Oxford, East (Mr. Smith) mentioned—not least the absence of any significant progress in designating marine environmental high risk areas—many of the Bill's provisions implement the recommendations of Lord Donaldson's report, "Safer Ships, Cleaner Seas". The report was commissioned following the grounding of the Braer in my constituency in January 1993, and my constituents remain concerned about the absence of salvage tugs, for example. Although many—if not most—of Lord Donaldson's recommendations have been implemented, gaps remain in the area of marine pollution prevention. I am sure that the House will return to those issues regularly.
The Braer incident gave rise to Lord Donaldson's report and to many compensation claims that have been processed by the International Oil Pollution Compensation Fund. Under clause 26 of the Bill, the fund will continue to enjoy the exemptions of the International Organisations Act 1968, although the United Kingdom's membership of the 1971 fund may terminate. I understand that that fund will be superseded by a 1992 fund, which implements British protocols that came into force on 30 May last year—regrettably, too late to increase the amount of compensation available for victims of the Sea Empress or the Braer incidents. As the House is continuing privileges by virtue of that clause, I wish to


register the continuing unhappiness and dissatisfaction of many of my constituents at the way in which outstanding claims, still unpaid by the 1971 fund, are being protracted.
In many cases, the claims and the amounts have been agreed, yet the moratorium means that people cannot be paid. In the past fortnight, one constituent told me that his business was threatened as a result of the delay. Another constituent wrote to me last week to say that she cannot reroof her house as the money has not come through, and her property is deteriorating. The Government believe, as all hon. Members do, that the polluter should pay. Unfortunately, in this case, those who have been polluted are paying the penalty.
While the 1971 IOPCF is operating within its legal rights by enforcing court orders for expenses at interim stages, my experience of the Scottish courts is that that right is not usually exercised. All questions of expenses are usually settled at the end when the case is finally determined. That is proving to be a particular financial burden on many of my constituents. I pay tribute to Viscount Goschen, the Minister for Aviation and Shipping in another place, to his officials and to those at the Scottish Office who have worked co-operatively on those matters. I hope that, when the executive of the 1971 fund meets next month, representatives of Her Majesty's Government will confirm that we intend to continue the privileges, although we may terminate membership of the fund. As we are doing it a favour, the executive might wish to address the continuing concerns of many of my constituents.

Question put and agreed to.

Bill accordingly read the Third time, and passed, with amendments.

ARCHITECTS BILL [LORDS]

Read a Second time.

Motion made, and Question put forthwith, pursuant to the Standing Order, That the Bill be not committed.—[Mr. Carrington.]

Question agreed to.

Read the Third time, and passed, without amendment.

LIEUTENANCIES BILL [LORDS]

Read a Second time.

Motion made, and Question put forthwith, pursuant to the Standing Order, That the Bill be not committed.—[Mr. Carrington.]

Question agreed to.

Read the Third time, and passed, without amendment.

NURSES, MIDWIVES AND HEALTH VISITORS BILL [LORDS]

Read a Second time.

Motion made, and Question put forthwith, pursuant to the Standing Order, That the Bill be not committed.—[Mr. Carrington.]

Question agreed to.

Read the Third time, and passed, without amendment.

JUSTICES OF THE PEACE BILL [LORDS]

Read a Second time.

Motion made, and Question put forthwith, pursuant to the Standing Order, That the Bill be not committed.—[Mr. Carrington.]

Question agreed to.

Read the Third time, and passed, without amendment.

DELEGATED LEGISLATION

Mr. Deputy Speaker (Sir Geoffrey Lofthouse): With permission, I shall put together the motions relating to delegated legislation.

Motion made, and Question put forthwith, pursuant to Standing Order No. 101(6) (Standing Committees on Delegated Legislation),

LOCAL GOVERNMENT FINANCE

That the Special Grant Report (No. 25) (Metropolitan Railway Passenger Services Grant for 1997–98) (HC 316), which was laid before this House on 18th February, be approved.

LOCAL GOVERNMENT FINANCE (SCOTLAND)

That the Special Grant Report (Scotland) on Grant in Aid of expenditure on rail services in the Strathclyde Passenger Transport Areas (HC 297), which was laid before this House on 19th February, be approved.

SOCIAL SECURITY

That the draft Social Security (Incapacity for Work and Severe Disablement Allowance) Amendment Regulations 1997, which were laid before this House on 24th February, be approved.

DATA PROTECTION

That the draft Data Protection (Regulation of Financial Services etc.) (Subject Access Exemption) (Amendment) Order 1997, which was laid before this House on 25th February, be approved.—[Mr. Carrington.]

Question agreed to.

Church of England (General Synod) (Measures)

[Relevant document: The Fourth Report from the Social Security Committee of Session 1996–97 (HC 352) on the Church Commissioners.]

Motion made, and Question proposed,
That the Pensions Measure, passed by the General Synod of the Church of England, be presented to Her Majesty for her Royal Assent in the form in which the said Measure was laid before Parliament.—[Mr. Alison.]

Mr. Stuart Randall: I am pleased that the Measure has been accepted, and that the Committee is content with it. The link between the commissioners and the Synod through the House has been maintained in a most gracious way by the right hon. Member for Selby (Mr. Alison) during his term as Second Church Estates Commissioner. I have often thought that the right hon. Gentleman, with his red book, was like a Minister on the Back Benches. It is much more comfortable to operate from the Dispatch Box, as I did for eight and a half years. The right hon. Gentleman has fulfilled his role in a quite extraordinary way. I thank him, through you, Mr. Deputy Speaker, from the bottom of my heart—I know that all hon. Members share those sentiments—for the gracious way in which he has discharged that marvellous responsibility.

Mr. Michael Alison (Second Church Estates Commissioner, representing the Church Commissioners): Mr. Deputy Speaker, I am speechless.

Question put and agreed to.

Canals

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Carrington.]

Mr. Warren Hawksley: Mr. Deputy Speaker, I thank you for the opportunity of raising a very important issue: the future of British canals. My interest in canals developed when I was a young boy in Shropshire. I suppose that my parents took me along most of the towpaths around the Shropshire Union canal while exercising our dog. I also admit that I fished in the canals on several occasions. I rarely boated on them, although it must be a wonderfully relaxing past time. Canals are a great leisure facility. I would prefer a better climate for regular boating, but those who do indulge thoroughly enjoy themselves.
As a member of the Shropshire county council in the 1970s, I was involved in supporting the restoration of the Montgomery canal. Later, as Member for The Wrekin, I persuaded the Department of Transport to route the Oswestry bypass at a higher level to allow the restoration work to continue underneath it. One of my constituents, Mr. Bob Clarke, is the news editor of Canal and Riverboat magazine, and he keeps me fully briefed about developments on our waterways. I pay tribute to him for his dedication and to my other constituents who are also canal users and who have expressed their enthusiasm for canals and devote much effort and resources to preserving them.
About 2,500 miles of navigable waterways in England, Wales and Scotland are owned by the British Waterways Board and the Environment Agency. Some 2,000 miles of canals are the responsibility of British Waterways, of which the vast majority are man made. They have existed for some 225 years and remain a working example of the waterways that fuelled the industrial revolution, particularly in the west midlands. The expansion of manufacturing industry in the midlands led to the black country, of which my constituency is part, becoming known as the workshop of the world and to Birmingham becoming known as the "city of a thousand trades".
The advent of railways, the takeover of many canals by railway companies to kill off competition by allowing canals slowly to deteriorate, along with the arrival of road transport, led to almost 1,500 miles of that connected network facing closure by the British Transport Commission in the 1950s and the early 1960s. The commission publicly said that there was no future for these waterways even as outlets for leisure and recreation.
It is worth reminding the House that it was only active campaigning by enthusiasts, including the Inland Waterways Association, with protest cruises and do-it-yourself canal restorations—once in 1962, in my constituency of Stourbridge, even under the threat of prosecution by the British Transport Commission for those who led a particular protest—that led to change.
The arrival of the British Waterways Board in 1963 saw a significant change and shift in policy. The dogma that had been shown by the British Transport Commission was gone and the new incoming British Waterways acknowledged the future of our canals for leisure and recreation.
Even in those early days, as custodians of what, in effect, is a living museum of the contribution that the United Kingdom had made to industrial development and manufacturing skills, British Waterways was constantly hamstrung by a lack of funding to enable it to wipe out the decay of more than a century and restore all the nation's waterways to a standard capable of withstanding the increasing growth that we are seeing in leisure pursuits.
Much the same has befallen those navigations that are the responsibility of the Environment Agency. It is ironic that the United Kingdom, which over the past 200 years has given the world so much in advancing engineering technology on land, in the air and on the sea has seen its river navigations, which linked canals with seaports, fall into a similar state of disrepair. In Europe, however, our competitors have developed many of their waterways to the bulk carriage of raw materials and finished goods. What can be greener than a navigation where one boat or large barge carries up to 20 lorry loads of what would otherwise have gone on the road?
Only last week, as a Member of this place, I went as a guest of the Port of London Authority with the parliamentary waterways group down the Thames from Westminster to Gravesend. We as members of the group saw the improved use of the riverside, with development, and the return of the river as a means of removing gravel and waste.
United Kingdom waterways, whether independent of the canal system or part of the integrated network, bring greenery, peace and tranquillity even into our city centres. Leisure and recreation facilities attract 160 million visits a year, either by boaters, anglers, cyclists, towpath walkers, naturalists, wildlife photographers or artists. So large has been the expansion of canal and river-related activities that a huge industry has developed round them.
Hundreds of people are gainfully employed in boatbuilding, servicing and hire-cruiser bases. There are about 26,000 boat owners on British Waterways waters and thousands more on the Environment Agency's navigations. Scores of tourists use industries that are connected to canal sides, including hotels, restaurants, marinas and retail premises, the construction of which has employed thousands of craftsmen.
I suppose that I should declare an interest. If the Montgomery canal were ever to open, I think that my wife's hotel could benefit, as many other businesses would in the Welshpool area.
Also to be considered are the midlands and the investment that has been attracted by waterside locations. The examples are numerous. I know that my hon. Friend the Minister has seen the multi-million pound regeneration projects on the canal sides of Birmingham, Manchester, Liverpool, Leeds and Sheffield. There have been equally prestigious developments in the west midlands, at Walsall, Coventry and Brierley Hill. The waterfront at Brierley Hill in the evenings is a hive of activity attracting many of my constituents, who thoroughly enjoy the facilities that it provides.
The British Marine Industries Federation has kindly provided me with statistics, which show that capital investment within the system runs at about £500 million. Hire and charter on inland waterways amounts to about £29 million. Repairs and mooring account for a further £30 million. I suggest that that is a considerable investment in our economy.
I know that it cannot have escaped the notice of my hon. Friend the Minister that millions of pounds of millennium and lottery moneys are providing for the restoration of the two canals across the Pennines in the form of the Huddersfield and Rochdale canals. There has been the reopening of the Kennet and Avon canal by Her Majesty the Queen. In addition, there has been the recent announcement of the Forth and Clyde and Union canals, which will give Scotland a second coast-to-coast waterway as well as restoring a waterway link between Edinburgh and Glasgow.
We must not forget the restoration work that is now proceeding on the link between the Thames and Severn rivers by the hoped-for reopening of the Thames and Severn canal and the Stroudwater navigations. The latter project is still operating very much as a voluntary scheme.
There also is the Stourbridge navigation trust in my constituency, which is hoping soon to receive lottery money of about £750,000 for the scheme that it has proposed. It is to be hoped that approval will be given in the next few months to commemorate the 30th anniversary of the reopening of the Stourbridge arm of the canal. That would be appropriate as the Staffordshire and Worcestershire Canal Society saved the mile-long arm of the Stourbridge canal and allowed the development of the bonded warehouse and canal company offices that provide tourist attractions, moorings and public meeting places.
Work starts this spring on the eventual restoration of the Dudley No. 2 canal. The work is being helped by European aid, which is being prepared by the Halesowen Lapal canal trust. Another scheme worthy of mention, which is now almost at a standstill until more funding becomes available—the Montgomery canal, which I have mentioned already—involves English Partnerships, which appears to have withdrawn its support. That is tragic because the scheme would help to relieve the pressures on the Llangollen canal. I believe that the canal and the associated project are examples of the far-sighted visions of canal enthusiasts, who persuaded English and Welsh local authorities of the tremendous tourism potential that such a restored waterway would have. I hope that my hon. Friend the Minister will assure us that he will do what he can to ensure that the turn of the century will still stand for the restoration of this waterway.
I acknowledge the demands upon the Exchequer, but I feel that there is a lack of detailed understanding of the infrastructure that is now an integral part of the waterways network which is of importance to an area of activity that even in the depths of the recent recession still shows some growth.
Our nation still has at least 2,500 miles of waterway that need vast sums spent upon them if they are to survive another 25 years, let alone another century. Within the system a multitude of skilled jobs is required, including construction plant operation, bricklaying, carpentry, metal working, flood control, property restoration and skills in architecture and the environment. In other words, we have a 2,500-mile training ground for the long-term and young unemployed. At the end of such training those involved would be in possession of proof of having been trained and having proficiency in a skill. I urge the Government to examine inland navigations in the long term. It would be a tragedy if all recent developments became worthless


because of a failure to maintain the main canal structure, which now needs about £100 million spent on it if it is to be safeguarded.
British Waterways has played its part by doubling its self-generating income. I believe, however, that users should pay. Canals have withstood the ravages of time and deliberate vandalism by previous owners. They still function but their stability, function and safety—indeed their very existence—can no longer be guaranteed by either British Waterways or the Environment Agency. What better place in which to train the unemployed in new skills or to engage craftsmen? It is an area in which skills are badly needed in the restoration of an integral part of the nation's unique heritage.
It would not be the first time that the nation's inland waterways have been used for getting people back to work, retraining or for finding work for the longer-term unemployed. An example is the Caledonian canal in Scotland, which was built by such people. Other examples are the Grand Union canal between Braunston and Birmingham—the waterway that linked London docks with midland industry, which was widened in the 1930s in the depths of a great depression. The project was used as a method of putting people back to work.
The Department of Employment and Education is expanding its workfare ideas towards a project works scheme. There are helpful ideas that could give the unemployed skills. These skills are to be obtained through schemes that involve the canal system.
Only a few who use the waterways—boaters and anglers—pay any appreciable amount for using them. Cyclists and walkers cause considerable erosion to towpaths yet they do not have to pay. Outside the areas that qualify for various types of Government or European aid, British Waterways is faced with having to repair that damage as well as trying to hold together a 200-year-old system, parts of which are literally falling to pieces.
Will the Government try to show vision in planning the important future of our canals? I accept that the Government tried to protect British Waterways in the Budget by giving it an extra £5 million for three years, which is 11 per cent. over the original provision, but I hope that more can be done. I realise the pressures that the Treasury is under and I am aware of its restrictive attitude on many occasions.
Why do the Government not free British Waterways from many of its restrictions and bureaucratic controls? Our hospitals are now trusts which can raise money in the marketplace. Why cannot British Waterways be similarly treated so that it can raise money, so that its long-term borrowing can be spread out over many years and so that a rollover of expenditure can take place to safeguard the basic canal structure? The canals have 12 million visitors a year and provide 35,000 jobs in the private, public and voluntary sectors. Only with such freedom will the massive and welcome schemes being funded by Europe, by the millennium fund and by lottery resources be justified, as well as keeping safe our old canals.

The Minister for Construction, Planning and Energy Efficiency (Mr. Robert B. Jones): I welcome the opportunity to discuss on the Floor of the House the

future of Britain's canals. This is the first Adjournment debate on waterways matters since 1988 when the Manchester ship canal was discussed, and I congratulate my hon. Friend the Member for Halesowen and Stourbridge (Mr. Hawksley) on securing the time to discuss this important matter. He has a long history of commitment to the canal network of the United Kingdom and it is good to see that he is able to bring that to our debate tonight. I am also delighted to see my hon. Friend the Member for Fulham (Mr. Carrington) in his place, because he has taken a close interest in the waterways network as it affects London. What a pity it is, however, that this important debate has not been graced by a Labour Member. Labour has demonstrated all too clearly tonight that it simply does not care about the waterways.
Many people have a strong affinity for the waterways, and I count myself among them. I have been closely involved in the examination of waterway issues in this House, both as a former chairman of the all-party waterways group and as a member of the Environment Committee which examined British Waterways a few years ago. Indeed, after my wedding reception in the House, I and my bride were taken down the Thames by my very good friends Chris and Val Coburn in their narrowboat Progress. I have a strong commitment to canals, and it was a pleasure to me to become the Minister responsible for inland navigation because I have been able to see a good deal more of the canal network, including the Caledonian canal, the Brindley Place and Gas Street basin in Birmingham, the Huddersfield narrow canal and the Sheffield and Tinsley canal.
I was delighted to visit the inland waterways display just a couple of weeks ago in the Upper Waiting Hall organised by the Association of Waterway Cruising Clubs, the Inland Waterways Association, the Royal Yachting Association and the British Marine Industry Federation. I also met recently a delegation led by my hon. Friend the Member for Reading, West (Sir A. Durant) and the hon. Member for Normanton (Mr. O'Brien) to discuss a range of canal issues. As my hon. Friend is retiring from the House at the forthcoming election, I take this opportunity to pay tribute to him for all his work both as my predecessor as chairman of the all-party waterways group and as my successor in the same role. I have little doubt that he will continue his interest even though he will not be a Member of this House.
There has recently been a rise in public interest in funding for the waterways. My postbag, prompted by the various waterway organisations, has had a significant increase in the number of canal-related letters. It seems, therefore, timely to set out the Government's role.
There are about 3,100 miles of operational canals and navigable rivers in the UK. The majority are managed by public organisations—British Waterways with 2,000 miles, the Environment Agency with 500 miles and the Broads Authority with 125 miles. That leaves around 475 miles which are managed by various other bodies such as local authorities, private bodies and charitable trusts. The Government sponsor directly BW, the Environment Agency and the Broads Authority. In view of the points made by my hon. Friend, much of what I say will be in relation to British Waterways.
It is often said that cities such as Birmingham, and perhaps parts of London, were built on the back of the canal system. They made use of the canals not only as a transport link, but as a means of drainage, waste disposal and water supply. It is fair to say that canals continue to


play an important part in many aspects of modern life. In particular, they are important to leisure and recreation, heritage, tourism and the environment. They have provided the focus for a range of urban and rural regeneration schemes.
Waterways provide an important catalyst for urban and rural regeneration. One of BW's aims is to promote and accommodate conservation and regeneration. In doing so, it works with a range of partners in the private, public and voluntary sectors. An excellent example of the role of canals in regeneration is the Birmingham waterfront, where more than £300 million of private sector finance has been attracted to developments alongside BW's canals. Another success story is the joint investment of £7 million by BW and Gloucester city council in Gloucester docks, which has attracted more than £30 million in private finance. The shift in the city's focus to the docks has seen the number employed there rise from 100 to 2,000 and tourism visits rise from a few thousand to more than 1 million. In Scotland, the millennium link, aided by £32 million from the Millennium Commission, will create 4,200 permanent jobs and attract £400 million of private investment along the 70 mile waterway corridor.
One of the most important areas of regeneration involves trying to cope with our housing needs. We are all familiar with the forecasts of an extra 4.4 million households; it will be much better if some of that housing can be provided alongside canals, regenerating disused sites and former industrial sites, rather than going into our green belt. It is a great pity that people such as the mayor of Berkhamsted, Mr. Peter Such, seem to think that it is not Government policy to build alongside the canals, when it clearly is. That policy can do a lot to regenerate our urban areas.
The profile of inland waterways has also been raised by the publication last April of the Inland Waterways Amenity Advisory Council's consultative report, "Britain's Inland Waterway: An Undervalued Asset". As a former member of IWAAC, I take great pride in the fact that it has produced a report which has provoked an interesting and lively debate. The Government and British Waterways will be required to respond to its conclusions and recommendations in due course.
The Government's policy is to maximise the benefits of the canals while taking account of the needs of all interests. To be more specific, there are five things I want: first, improved services and amenities for all users and beneficiaries of the canal network; secondly, a more strategic approach to the day-to-day use, planning and future development of navigations; thirdly, the protection and enhancement of the natural environment and the man-made heritage of buildings and structures; fourthly, a balanced approach so as to avoid conflicts between different uses; fifthly, a commercial approach, adopting cost-effective solutions and efficiency improvements to ensure good value for money for the taxpayer and payers of charges.
I value the considerable commitment and enthusiasm demonstrated by canal restoration societies and others in restoring canals. The Government have provided financial help to a range of projects through the land reclamation programme grant and the environmental action fund. Canal restoration schemes are also eligible for money from the various lottery distribution boards.
My hon. Friend is aware that there continues to be pressure on public spending, so all expenditure is carefully scrutinised. In recognition of the importance that the Government attach to the waterways, not only have they been cushioned from that pressure more than other spending programmes, but our contribution to the waterways has increased.
In the last Budget, for example, we announced an extra £5 million for BW in each of the next three years—an increase of almost 11 per cent. above original provision That compares with cuts of 9 per cent., 12 per cent. and 14 per cent. in the DOE's total expenditure over the next three years. In addition, I recently announced an extra £1.233 million for this year to enable BW to carry out additional repairs and maintenance to the network. That will bring the total grant in aid from Government in 1996–97 to more than £51 million. By any standards, that is a significant slice of public money.
I am fully aware of the survey that BW undertook last year, which identified a £100 million backlog of maintenance. As I have said, I have seen a number of the sites where urgent work is required. The Government recognise the seriousness and urgency of the problems, especially on the Caledonian canal, and have responded by providing immediate funding of £2.8 million. Only last Friday, my right hon. Friend the Secretary of State for Scotland announced a further £3.2 million for BW over the next four financial years to help with future repairs to the Caledonian canal. Taking into account all the extra Government money and BW's own efforts, that should enable BW to make major progress in dealing with the backlog over a realistic time scale.
As a nationalised industry, BW is responsible for the day-to-day management of its estate. Government objectives for BW require it to act commercially and in a manner which is commensurate with its statutory responsibilities. That includes meeting its costs as far as possible from charges on users and revenue from its property. I recognise that BW licence fee increases have not been well received. Nobody likes paying more, but it was a commercial decision for BW, and one I fully support. If the Government are giving an extra 11 per cent. a year to BW for the next three years, boaters must also play their part in helping BW to continue to invest in the future of the waterways.
It should be remembered that grant in aid and licence fees are not the only sources of funds available to BW; it generates its own income via its property, commercial and leisure interests, and for 1996–97 it expects income of more than £38 million from such sources and forecasts more for 1997–98.
In addition, a range of other funding opportunities is available to BW. This year, for example, BW has benefited from £10 million from the Government's single regeneration budget challenge fund for a London-wide canal regeneration programme and £3.6 million for a project on the Calder and Hebble navigation at Sowerby bridge. BW has also been a partner in lottery awards this year of £25 million for a programme of heritage and environmental conservation and visitor improvements on the Kennet and Avon, £2.7 million for the Ribble link—a new waterway linking the Lancaster canal to the Leeds and Liverpool—and £14.8 million for the Huddersfield canal. Two non-BW canals, the Ashby and the Rochdale, have also received £1 million each from the Government's rural challenge fund. BW also received


more than £1 million from local authorities and expects to receive £1.5 million in grants from Europe in the current year.
BW has worked hard to attract funding from a wide range of sources. It is a reflection of its enterprise and commercial ability that, over the past seven years, it has increased self-generated income from £21 million to £43million. It certainly deserves credit for its performance.
My hon. Friend expresses an interest in finding a way to get the whole waterway network designated so that it is eligible for European grant aid. As I have just mentioned, BW already bids for funds from a variety of sources, including Europe. It continues to look at ways in which it might increase revenue, including options that would allow greater flexibility in generating additional income for the canal network.
A new national designation for the waterway system is one of the conclusions the Inland Waterways Amenity Advisory Council drew from its examination of inland waterways. That is an issue that I will wish to consider as part of the Government's and BW's eventual response to IWAAC's report.
My hon. Friend is keen to extend the use of casual labour and youth training to help with the maintenance and repair of the waterways. I particularly pay tribute to the waterway recovery group, which provides the opportunity for volunteers to work on all aspects of canal restoration. In his 1995 Budget, my right hon. and learned Friend the Chancellor of the Exchequer announced a pilot initiative, project work, to help long-term unemployed people. The project, which has recently been extended due

to its success, offers a programme of intensive jobsearch help and practical work experience for people aged between 18 and 50 who have been out of work for at least two years. As my hon. Friend said, there is a history of canal projects being used as opportunities for job creation. People on project work carry out work of value to the local community, which certainly includes work on the waterways.
There is plenty to be positive about. The total amount of money going into the canal network from a wide variety of sources is greater than ever. There is renewed interest in the canal system for a range of different activities—leisure, recreation, tourism, regeneration, conservation, education, and in some areas still for commercial traffic.
Only a few months ago, I agreed to the upgrade of the Sheffield and Tinsley canal—the first upgrade since 1983—following significant public and private investment in the area, including a commitment from Sheffield city council to meet the costs of the additional work required to maintain the canal to cruising standard for 21 years.
Of course BW has a significant backlog of work, but as I said it is taking positive action to tackle the problems and invest in the future of the waterways. With all the activity in the public, private and voluntary sectors, we can look forward with confidence to the future of Britain's canals. I congratulate my hon. Friend on this important debate, and wish him and the canal system well for the future.

Question put and agreed to.

Adjourned accordingly at five minutes past Nine o 'clock.